The housing finance regulator NHB is examining various issues and will soon come out with notification on Loan to Value (LTV) on advances, in line with the RBI announcement last month, said a top official. The reduction in LTV ratio will help make home loan cheaper as housing finance companies (HFCs) would have more fund for lending. “We are discussing it. As of now we are evaluating it. It (notification) will (happen) very shortly. We are looking at some other angles also to see if we could do things together,” NHB Managing Director S Kalyanaraman told PTI. Last month, RBI had reduced the standard assets provisions on individual housing loans to 0.25 per cent and also lowered the risk weights on such lending.
The risk weight for individual housing loans above Rs 75 lakh has been reduced to 50 per cent from the earlier 75 per cent, while for loans between Rs 30 and Rs 75 lakh, a single Loan to Value (LTV) ratio slab of up to 80 per cent has been introduced with a risk weight of 35 per cent. According to experts if the regulator reduces the risk weights for home loans over Rs 30 lakh category, it will release capital for the industry. Asked if National Housing Bank plans to tap external commercial borrowing (ECB) market, he said, there is no plan at the moment because domestic market provide cheaper alternative for raising fund.
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“My business is refinancing at the end of the day, refinance margins are very thin. Today, bond markets…are much better than raising an external commercial borrowing. I have also got the World Bank low income housing fund of USD 100 million,” he said. Besides, he said, Department for International Development (DFID) of the UK has extended 50 million pound for affordable housing programme. “We are just about to sign with another multilateral agency about 100 million Euro for sustainable livelihood,” he said.