Public sector lenders Canara Bank, Corporation Bank and Allahabad Bank have decided to lower interest rates on housing loans, preferring to keep their prime lending rates (PLRs) unchanged. ICICI Bank [Get Quote] Managing Director and Chief Executive Officer K V Kamath has indicated that the country's second largest bank would review interest rates only in 2008-09.

I am an NRI working abroad and I would like to purchase residential plot in India. I wanted to know which banks provide loans for land/plots and what documents one needs to submit to avail the same.

With longer life spans and nuclearisation of families, has come the need for greater financial planning among the elderly. While it goes without saying that early retirement planning is best, what about those older people who, due to unfavourable circumstances, have not been able to build an adequate kitty to live off?

'Find and fund your house' is the motto of State Bank of Mysore's Home Loan Utsav that opened here on Monday. A 50 per cent concession in processing fee is offered. Some 10 builders are showcasing their housing projects at the venue. If a visitor decides to choose one and seeks a housing loan for it, the bank would provide its home loan that takes care of furnishing, and registration costs, in addition to the cost of the house.

With a majority of the nationalised and private sector banks going in for cuts in their lending rate on home loans and others loans, that too before the RBI's mid-term review of monetary policy this month-end, it is expected that the urban co-operative banks in the state might follow suite.

With the recent rate cuts on home lending rates and vehicle loans by banks like ICICI Bank, IDBI, State Bank of India (SBI) and Bank of Baroda (BOB), the urban co-operative banks are feeling the heat of competition from private and nationalised banks.

Jyotindra Mehta, managing director of Rajkot Nagarik Shahakari Bank Ltd (RNSBL) told Business Standard, the reduction in the lending rates by the nationalised and private sector banks will certainly have impact on the co-operative bank's business on home loans and vehicle loan.

Country's largest public sector lender State Bank of India (SBI) has launched two new schemes - Reverse Mortgage Loan and SBI Home Cash - for people in Gujarat.

Feeling the heat of competition, Bank of Baroda (BOB) has cut the interest rates on new home loans for the second time in just 45 days. It has slashed the floating rates by upto 75 basis points to 10-10.5 per cent.

GE Money and Wizard are set to invest $200 million in the Indian market and thus transform the home loan industry in the country. With an aggressive interest rate of 9.99% to consumers and a successful business model that ensures superior customer service, the joint-venture is planning to wake-up home loan buyers in the country.

This festival season could make Prospective home loan borrowers smile a bit. Housing finance Institutions are now out to surprise by their lowered lending rates.

Union Bank of India has cut interest rates on home loans by 25-50 basis points, depending on the size of the loan. The reduced rates are applicable to new home loans.

For loans less than Rs 20 lakh, the floating rate has been revised by 25 basis points to 10.75 per cent (11 per cent) for a tenor of 5 years, 11.25 per cent (11.5) for 5-10 years and 11.50 per cent (11.75) for 10-20 years. The fixed rate remains unchanged at 10.75 per cent.

In the case of loans above Rs 20 lakh, the discount in interest rates would depend on the margin of loan taken. For instance, if the customer takes a loan for over 75 per cent of the value of the house, the discount in interest rate would be 25 basis points.

Frauds in the financial services industry are on the rise and the situation is even more alarming in case of the housing loans.

The frauds in the sector have increased tremendously, of late, leading to a rise in non-performing home-loan assets for banks.

Combating frauds has become a high priority because mortgage lending and the housing market have a significant effect on the national as well as global economy.

In the India, the CBI recently issued a warning that mortgage fraud had reached epidemic proportions, while a recent press report in the UK said lenders there are set to lose millions of pounds on fraudulent mortgages.

Union Bank of India has cut interest rates on home loans by 25-50 basis points, depending on the size of the loan. The reduced rates are applicable to new home loans.

For loans less than Rs 20 lakh, the floating rate has been revised by 25 basis points to 10.75 per cent (11 per cent) for a tenor of 5 years, 11.25 per cent (11.5) for 5-10 years and 11.50 per cent (11.75) for 10-20 years. The fixed rate remains unchanged at 10.75 per cent.

In the case of loans above Rs 20 lakh, the discount in interest rates would depend on the margin of loan taken. For instance, if the customer takes a loan for over 75 per cent of the value of the house, the discount in interest rate would be 25 basis points.

India's largest real estate developer by market value, DLF Ltd said the high interest rate on home loans has slowed down the demand for homes and properties.

"I want the interest rates to be reduced," Kushal Pal Singh, chairman, DLF Ltd said. "The moment interest rates drop, people will come forward to buy houses."

DLF Ltd chairman Kushal Pal Singh

DLF Ltd chairman Kushal Pal Singh

The Reserve Bank of India has increased the interest rates on home loans by almost 400 basis points since January 2006 to cool the property market. Home loan rates have moved up from 7.50% to 11.50% in the last two years.

"Due to the increase in the mortgage rates, the market has got subdued at this moment temporarily," Singh said, adding, "there is a slowdown on the mortgage side of the market."

Singh, who made his name and money building up Delhi's southern suburb, Gurgaon, is among those who have benefited from the three-year boom in real estate in India. Lower lending rates three years ago, coupled with tax breaks for house ownership and rising salaries, helped boost real estate prices three times in this period. Singh started developing Gurgaon in the late 1980s when land values were still at throwaway rates. Now high-end flats in Gurgaon can sell for as much as Rs3 crore a unit.

GDP ratio for Home Loan in India continues to be a dismal 5 per cent as against 50 per cent in US and UK Despite a boom in the real estate.

These observations were made by the Associated Chambers of Commerce and Industry of India (Assocham), which also pointed out that since buying a home requires huge investment, higher home loan GDP ratio is necessary as 90 per cent of borrowers are the first time borrowers.

"At present, India has a housing shortage of about 19.4 million units of which 6.7 million is estimated for urban sector and 12.7 million units in rural. However, the demand is set to shoot up to 45 million units for both rural and urban areas by 2012," said Assocham president Venugopal N Dhoot.

Shobha Developers Ltd, the Bangalore based real estate developer, is planning to bid for the slum redevelopment projects in Mumbai. Shobha is will tie up with local partners to bid for projects under the Slum Rehabilitation Authority (SRA) scheme. Partnership with an existing developer is necessary to bid for projects under SRA scheme. As per the Slum Rehabilitation Authority (SRA) scheme a developer must have successfully completed housing township development project covering at least 4, 00,000 Sq m and with a minimum built up area of 70 lakh sq ft.

The National Real Estate Development Council, a realty trade group, has proposed the formation of a self regulatory body for real estate industry to liaison with the government.

The proposed body could operate in four levels-centre, state, district and town levels and will have representation from stake holders such as the ministries of urban development, as well as real estate developers and others managing bodies such as the Delhi Development Authority.

Interest rates in economy including home loans in India have peaked and it is unlikely they would go up further, said Deepak Parekh, HDFC chairman, according to a Times of India report on July 10.

"I think interest rates have already peaked. I don't see RBI hiking rates in the upcoming credit policy nor do I see interest rates coming down in near future, Parekh added.

Property buyers beware someone is watching you. Look who - the income tax department. Now when you buy property you must be able to prove that you can afford what you buy. Whether you have taken home loan, to buy property or have arranged the money from somewhere else I -T department will keep check on your finances.

The Income Tax department is planning to scrutinize the tax returns of people who have purchased property worth more than five times their annual income. This means that if you have purchased property worth Rs 1 crore, then your annual income should be at least Rs 20 lakh.

"Indian lenders may face marginally more bad mortgages because of higher interest rates," said Deepak Parekh, chairman, HDFC, Indian leading home finance company, on July 12, 2007, according to a wire agency report carried in today's newspapers.

Banks have raised interest rates 3 times since the beginning of the year.

HDFC will wait until 31 July for the Central Bank to announce its quarterly assessment of the economy before deciding on its lending and deposit rates, Parekh added.

Are you are good bargainer? If yes then you can now do bargaining on home loan. It will all depend on your art of negotiation. Home loans are available for bargain - unofficially though. Banks and housing finance companies (HFCs) are willing to bend and lower rates if you are ready for negotiation.

According to HDFC's "Monsoon Hungama" new customers get a 0.25% discount on home loans. Old customers, however, do not benefit from this. They continue to pay 11.25% pa on floating home loans even as new customers got a tad better deal at 11%.

High liquidity and inflation remaining below 5 per cent for six weeks in a row have raised banks' hopes for a cut in home loan rates after the credit policy review on July 31. But it is unlikely to be broad-based cut with public sector banks preferring to remain away from slashing rates. Private banks, which effected severe hikes over the last few months, however, may slash them.

The Reserve Bank of India (RBI), however, is not likely to signal reversal of upward trend in interest rates in the upcoming credit policy review on July 31, according to experts. The reversal in benchmark interest rates like reverse repo rate and repo rate could be seen only by the year-end, they say.