News & Views on Indian Real Estate

Wednesday, August 27, 2008

Anticipating Realty Slump, Banks make Borrowers pay more

Banks are all set for the anticipated correction the realty market and it’s the prospective home loan borrowers who will be hit. Expecting a fall in property rates, lenders have either increased or are planning to increase the borrower’s share in the actual cost of a home (down payment). Until recently, some banks were financing up to 90% of the home purchase value while other conservative ones had been giving out 85-90% of the actual price as loan. But according to a survey, some banks have now started increasing margins on home loans, which means borrowers will have to shell out more while purchasing a house. Even the public sector banks, which are already strict with their margins, might increase the borrower's share. However, big lenders like ICICI plan to stick to current margin levels.