Ask Mint | Property, loans to be cheaper in ’09

Ask Mint | Property, loans to be cheaper in ’09

I was not able to purchase a property in early 2007 as it had become slightly unaffordable then. However, I plan to buy one sometime in the next 6-12 months. I hope this would be the right time. Please advise.

We expect property prices to correct anywhere between 15% and 20%, depending on the town and the location, across the country. However, what is equally important is the availability of “no-frills affordable houses". The developers have realized this and are taking up projects to cater to this demand. This itself will make it affordable.

Further, on the interest rate front, we feel that they are certainly headed lower in 2009. With oil prices around $40 (about Rs1,900) a barrel, inflation easing rapidly and the authorities moving proactively on the fiscal and monetary front, interest rates are likely to head lower and this should be good news for you.

To sum up, 2009 should be a much better year for you and for all property buyers on both counts—property price and interest rate—compared with 2008 or even 2007. Wishing you and all the readers of Mint the very best in their endeavour to own a home of their own.

I have a home loan from HDFC. Currently, I am paying an interest rate of 11.50%. I have read in the newspapers that the bank has reduced interest rates for both existing and new customers. However, I am confused at the rate applicable to my loan as my outstanding amount is Rs24.73 lakh. News reports said loans above Rs20 lakh would be at 11.25%. I would like to know the interest rate applicable to my loan.

We (HDFC) have reduced our retail prime lending rates by 50 basis points and based on what you have stated the new rate applicable to you would be 11.00% (11.50% less 50 basis points).

In the case of existing customers, irrespective of the loan amount outstanding, the borrower will get the benefit of reduction of 50 basis points in retail prime lending rates.

The reduced rate will be applicable to you based on the date of your first disbursement, which in some cases could be from 1 January itself. I suggest you write to us with your loan account number or visit the nearest HDFC branch for any further clarifications.

The rate of 11.25% for loans above Rs20 lakh is applicable only to new home loans.

Renu Sud Karnad is joint managing director, HDFC.

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