The RBI has introduced three measures, which we believe will primarily
impact premium and luxury residential projects.
The RBI has increased the risk weight for residential housing loans of INR7.5m and above, irrespective of the loan-to-value (LTV) ratio, to 125%. However, risk weights for other loans remain unchanged.
So Luxury in India means over 75 Lakhs.
The LTV ratio for home loans has been capped at 80%. Lenders typically have an average LTV ratio of 70%. Hence, we see no significant impact on end-user demand from the 80% LTV imposition. The LTV however, should curb price rises and speculation over the near term in the luxury segment.
The RBI has raised the standard asset provisioning for all 'teaser rate' loans to 2%, from 0.4%. We believe this would end the 'Teaser rate' campaign wherein lenders offered a lower initial 'interest rate' (50bps below the current rate) and calculated affordability (or ability to service loan) of a buyer on the lower interest rate
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