Upping the ante in the housing loan segment, State Bank of India has steeply reduced its affordable home loan rates by up to 25 basis points, with the lowest rate of 8.35 per cent for new women borrowers.

State Bank of India, on May 8, 2017, announced a steep reduction in its affordable home loan rates by up to 25 basis points, with the lowest rate of 8.35 per cent for new women borrowers, who are salaried. For the non-salaried women borrowers, the reduction is 20 bps.

With around 26 percent market share, the nation’s largest lender is also the biggest player in the home loan segment. Even at the existing 8.60 per cent, SBI offers the lowest rate. HDFC, the second-largest player in the space, offers loans at 8.65 per cent to women for loans up to Rs 75 lakh and 8.7 per cent for others. Similar is the minimum rate being offered by the largest private lender, ICICI Bank.

For male borrowers, SBI said the limited period offer is valid until July 31 and the new rate for the salaried will be lower by 20 bps at 8.40 per cent. A non-salaried male borrower can avail of a loan at 15 bps lower than the current rate, said a highly placed source in the Bank. “This is a huge saving for the borrower as the 25 bps reduction translates into a saving of Rs 530 per month on EMI.” The new rates will be effective from May 9, 2017.

Explaining the reason behind the move, which makes it’s offering the lowest in the industry, the said source said the bank has seen a hike in home loan inquiries of late and reduction in rates will further help millions of buyers fulfill their dream of owning a home. Also, the bank expects that the new rates will attract the fence-sitting borrowers to go in for a loan now. This is a giant leap to give a fillip to the affordable housing segment, keeping the government’s vision of providing housing for all by 2022, the source said. A lot of customers are undecided on a new home, as rates of the market, as well as finance, have been high for too long. That should hopefully change now,

With a home loan book of Rs 2.23 trillion, SBI leads the home mortgage segment with 25-26 percent market share. He, however, said the new offer may not push up its market share significantly, as 45 per cent of its Rs 2.23 trillion home loan book is already under the Rs 30 lakh bracket and the rest of the credit industry is also very aggressive.

SBI is also giving a special offer for construction finance, to builders for affordable housing projects. This will give a dual push both for construction finance and also for home finance for affordable homes, but the bank has not quantified the reduction. Clearing the air about the delinquency levels in the home loan segment, the source said that the highest is among the rural borrowers with a ticket size of under Rs 4 lakh, but for other segments, SBI has the lowest bad loans.

In a step that will bring the Real Estate Act closer to implementation, the union government has notified the rules under the act. We examine its implications for homebuyers and developers.

The union government of India recently notified the rules under the Real Estate Regulation Act, which will be applicable to the five union territories. Now, all the states are expected to notify their own rules, in the near future. However, the question that remains is whether the rules will meet the expectations of homebuyers and the realty sector.

Although numerous promises have been made over the years, not much has moved forward, from ideation to actual implementation of policies, assert experts.

A fair Real Estate Regulatory Authority (RERA), should hold both, buyers and developers accountable and ensure transparency in the real estate development space. It will help developers to become more fiscally prudent and focus on delivery timelines. There is clearly a trust deficit between customers and developers and this trusts deficit will hopefully, be bridged very soon, thereby, benefitting the entire industry.

Key features of the rules notified under the Real Estate Regulation Act

• Developers have to open an escrow account for all sales proceeds and use this account for all payments for the particular project. 70% of the money collected, has to remain in the escrow account, to facilitate all project-related expenses and the rest of the money can be taken out by the developer to use as they deem fit.
• There is an interest penalty for delayed possession that is imposed on the developer.
• Projects can only be launched, upon receiving the relevant approvals from the concerned authorities. These approvals have to be put up on the RERA website, along with all the pertinent project details and the project has to be approved by the regulatory authority. Customers can log onto the RERA website, to see the project’s details.
• Properties will be sold strictly on the basis of carpet area.
• Any grievance/complaint has to be resolved by the state’s real estate regulatory authority, within 60 days.

Can the RERA fulfill homebuyers’ and builders’ expectations?

Experts feel that Transparency and trust factor will automatically increase, as it will become mandatory for developers to post all information pertaining to the project’s plan, layout, government approvals, land title status, sub-contractors to the project and schedule for completion, with the state real estate regulatory authorities. This law will act as a regulator, to govern both residential and commercial real estate transactions.

Tier-2 and tier-3 markets, where a lot of consumers have lost their money in the past, will again see a spurt in investments. Moreover, FII investment and FDI investment into real estate will also grow.

While the notification of the rules, is definitely a step in the right direction, the success of the Real Estate Act, will depend on its implementation.

However, we should always remember that this act is intended to safeguard the consumers and it should never be treated as a tool to only penalize people.

For RERA to succeed, its implementation should be in true spirit and should not become a tool for corruption, harassment and delays. It is for Government to ensure speed and correct implementation of the Act. Further, RERA is a blessing in disguise for entire realty sector as it will regularize the purchase process and improve transparency.