NHB says housing demand hit due to high prices, rates
Demand for housing has been hit mainly due to high real estate prices and hardening interest rates, said RV Verma, chairman and managing director, National Housing Bank, Thursday.
June 03, 2011 / 10:04 IST
Saikat Das
Moneycontrol.comDemand for housing has been hit mainly due to high real estate prices and hardening interest rates, said RV Verma, chairman and managing director, National Housing Bank, Thursday."Inventories are building up due to this slowdown in demand for houses," RV Verma told reporters on the sideline of a banking summit here.
Verma also said that National Housing Bank has revised upwards the ceiling of capital requirements for new entrants (housing finance companies), who want to register under NHB, to Rs 10 crore from Rs 2 crore. NHB currently has 65 registered companies.Despite this slowdown, Verma said National Housing Bank expects to make the highest ever loan disbursal estimated at Rs 12,000 crore in the July-June 2011-12 period, as against Rs 8,500 crore during the same period last year.The regulator for housing finance companies has revised its refinance rate, which is linked to its prime lending rate, to 10.5% from 10.25%. However despite Reserve Bank of India (RBI) hiking key policy rates last month, National Housing Bank has no immediate plans to revise its lending rates unless the central bank hikes policy rates significantly, Verma said.Any further rate tightening in policy rates by the RBI would hurt housing demand significantly, he added.RBI had since 2010 raised repo and reverse repo rates nine times to 7.25% and 6.25%, respectively, to control high inflation mainly due to high fuel and commodity prices. Repo is the rate at which banks borrow money from RBI. Reverse repo is the rate at which banks lend to RBI.On rural housing, Verma said that the bankers' committee has submitted its recommended to the ministry of rural housing in which it has envisaged schemes on rural housing both for below and above poverty line people. Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
