Home loan rates may not be sustainable, said bankers.
The dual-rate scheme (first introduced by SBI and then by almost all other players) and low interest rates saw many borrowers either switching their banks to ones that offered lower Home Loan Rates or resetting their loan rates with their existing banks.
Mr Nandakumaran said, “The dual rate scheme was more on account of the circumstances and it will not sustain in the long term.”
He added that the bank did take over a number of home loans from other banks. “The trend of customers refinancing their loans at intervals, say every five or six years, is bound to stay, as customers are becoming more discerning and informed,'' he said.
Mr Nair said, “Lending rates have softened to unbelievable levels. They are not realistic as compared to the market conditions. If you look at the current market situation, there is little possibility of rates going down from these levels, unless there is some aberration.”
Ms Sud Karnad said interest rates could remain low in the near-term. “We do not expect interest rates to reach levels of 2008 as there is ample liquidity in the system. The credit pick-up in the system is very low; just around 13 per cent,'' she said.
Rise in prices
The rise in property prices, especially in cities such as Delhi and Mumbai, also impacted demand.
“After the recession in 2008, there was growth in demand. But property prices in some pockets went up. This slowed the demand and dampened the enthusiasm of consumers,'' Mr Nair said.
Ms Sud Karnad also agreed that the demand for property is directly related to property prices. For demand to pick up, property prices should be affordable.
However, she said, “Property prices in India are unlikely to fall in any major way. In fact, they have recovered by 15 to 25 per cent, particularly in metros such as Mumbai and Delhi. Over the past two quarters, developers have seen acceleration in sales and also a substantial increase in the inquiry levels for properties.”
Mr Nandakumaran said, “The dual rate scheme was more on account of the circumstances and it will not sustain in the long term.”
He added that the bank did take over a number of home loans from other banks. “The trend of customers refinancing their loans at intervals, say every five or six years, is bound to stay, as customers are becoming more discerning and informed,'' he said.
Mr Nair said, “Lending rates have softened to unbelievable levels. They are not realistic as compared to the market conditions. If you look at the current market situation, there is little possibility of rates going down from these levels, unless there is some aberration.”
Ms Sud Karnad said interest rates could remain low in the near-term. “We do not expect interest rates to reach levels of 2008 as there is ample liquidity in the system. The credit pick-up in the system is very low; just around 13 per cent,'' she said.
Rise in prices
The rise in property prices, especially in cities such as Delhi and Mumbai, also impacted demand.
“After the recession in 2008, there was growth in demand. But property prices in some pockets went up. This slowed the demand and dampened the enthusiasm of consumers,'' Mr Nair said.
Ms Sud Karnad also agreed that the demand for property is directly related to property prices. For demand to pick up, property prices should be affordable.
However, she said, “Property prices in India are unlikely to fall in any major way. In fact, they have recovered by 15 to 25 per cent, particularly in metros such as Mumbai and Delhi. Over the past two quarters, developers have seen acceleration in sales and also a substantial increase in the inquiry levels for properties.”
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