Shares of housing finance companies gained as much as 10 per cent on Friday after RBI said banks can now provide loans up to 90 per cent for properties that cost Rs 30 lakh or below.
On BSE, GIC Housing Finance soared 9.69 per cent, Dewan Housing Finance Corporation 2.88 per cent and Can Fin Homes 2.82 per cent.
Earlier, the facility was available only in cases where the cost was up to Rs 20 lakh.
This will benefit those home seekers who plan to buy properties in the range of Rs 20-30 lakh.
The RBI’s decision comes in the wake of all major banks reducing interest rates on home loans.
The Reserve Bank through a circular yesterday said that in the case of ‘individual housing loans’ falling under the loan category of up to Rs 30 lakh, the LTV (Loan to Value) ratio has now been raised up to 90 per cent.
For properties between Rs 30 lakh and Rs 75 lakh, LTV is up to 80 per cent and for those above Rs 75 lakh, the ratio comes in at 75 per cent.
The loan to value (LTV) ratio is used by lenders to express the ratio of a loan to the value of an asset purchased.