How are Home Loan Interest Rates Determined

 Borrowers should possess a thorough knowledge of the key factors influencing home loan interest rates in India before applying for this credit option.

Thanks to the easy availability of home loans, people can now fulfil their dreams of owning a home. Furthermore, the high-value loan amount and the competitive home loan interest rates have made this credit facility popular among homebuyers in India.

The monthly instalments and borrowing costs are significantly impacted by interest rates. Therefore, borrowers should possess a thorough knowledge of the key factors influencing home loan interest rates in India before applying for this credit option.

How Do Financial Institutions Determine the Home Loan Interest Rates

Lending institutions consider the following factors while determining the home loan interest rates for a particular borrower:

Location of the property

The property’s location also impacts the interest rates on a home loan. If a property is located in a posh location with amenities, such as railway stations, grocery shops, hospitals, schools, etc., in proximity, it will have a high resale value.

Consequently, financial institutions will charge a lower interest rate for such properties. On the other hand, choosing a property in an area with poor facilities will result in a higher interest rate.

Income stability of a borrower

The interest rates charged by any financial institution depend heavily on a borrower’s income status. Lenders favour borrowers with a stable source of income. Therefore, salaried people are given lower interest rates because their steady income indicates the ability to pay back loans on time.

Loan quantum

Borrowers should give equal weightage to loan principal. High loan amount will increase home loan EMI burden for a borrower, thus increasing the risks of credit defaults. Hence, financial institution charges a higher interest rate for a greater loan amount.

Borrowers must make sure to pay a sizable down payment if they require a sizable loan principal. A sizable down payment will lower the loan balance, resulting in a lower home loan interest rate.

RBI hikes key interest rate by 35 bps on 07 Dec 2022

 Fight against inflation remains major concern, growth forecast is lowered to 6.8 pc from 7 pc this fiscal says RBI. Reserve Bank of India Governor Shaktikanta Das announces the bi-monthly monetary policy, Wednesday, Dec. 7, 2022 hiked the key policy rate, the repo rate or the rate at which the RBI lends funds to banks, by 35 basis points to 6.25 per cent in a bid to rein in retail inflation.

What impact will the RBI’s decision have?

Lending rates of banks are expected to go up as the cost of funds is expected to rise further. EMIs on vehicle, home and personal loans will also rise. The external benchmark linked lending rate (EBLR) of banks will rise by 35 bps — one basis point is one hundredth of a percentage point— as such loans are linked to the Repo rate. As much as 43.6 per cent of the total loans are now linked to the Repo rate.

Marginal cost of funds-based lending rates (MCLR), which accounts for 49.2 per cent of the loans portfolio of banks, are also expected to move up. The hike will help in moderating inflation in the country.

Deposit rates are also expected to rise in the near future. SBI, India’s largest bank, now offers a 6.10 per cent rate on one-year term deposits.

If the retail inflation cools down, the RBI is likely to pause the rate increases in 2023.

Month	Hike (BPS)	Repo Rate %
May-04	40	4.4
Jun-08	50	4.9
Aug-05	50	5.4
Sep-30	50	5.9
Dec-07	35	6.25

SBI Cards shares up 0.78% as Nifty gains

 SBI Cards and Payment Services Ltd. traded 0.78 per cent up in Monday's trade at 12:28PM (IST). Around 123,822 shares changed hands on the counter.

The counter opened at Rs 810.0 and touched an intraday high and low of Rs 818.0 and Rs 805.4, respectively, in the session so far. The stock of SBI Cards and Payment Services Ltd. quoted a 52-week high of Rs 1028.75 and a 52-week low of Rs 656.1.

Total market cap of the SBI Cards and Payment Services Ltd. stood at Rs 76658.91 crore at the time of writing this report.

Key Financials
The company reported consolidated net sales of Rs 3453.32 crore for the quarter ended 30-Sep-2022, up 5.84 per cent from previous quarter's Rs 3262.85 crore and up 28.12 per cent from the year-ago quarter's Rs 2695.46 crore.

The net profit for latest quarter stood at Rs 525.64 crore, up 52.4 per cent from the same quarter a year ago.

Shareholding pattern
As of 30-Jun-2022, domestic institutional investors held 11.34 per cent stake in the firm, while foreign institutional investors held 8.29 per cent and the promoters 69.64 per cent.

Valuation ratio
According to BSE data, the stock traded at a price-to-earnings multiple of 36.17 and a price-to-book ratio of 10.36. A higher P/E ratio shows investors are willing to pay a higher price because of better future growth expectations. Price-to-book value indicates the inherent value of a company and is the measure of the price that investors are ready to pay even for no growth in the business.

SBI Cards and Payment Services Ltd. belongs to the Credit Card & Allied Services industry.

TSSC partners with SBI Card for placement-linked skill development courses for women

 The centre is set to provide National Skills Qualifications Framework (NSQF) and National Curriculum Framework (NCF) aligned short-term courses in telecom service job roles.

Telecom sector skill training provider TSSC on Monday said it has partnered with SBI Cards and Payment Services for placement-linked skill development courses to train 763 women over the next two years.

Under this partnership, Telecom Sector Skill Council (TSSC) has launched a telecom centre of excellence (CoE) at the Government College for Girls Gurugram under a CSR initiative for women empowerment.

The project will cater to 763 candidates over the span of two years beginning from September this year, the statement said.

“The CSR project under this collaboration will be a pertinent boost in skilling the female youth and help them inculcate the spirit of self-reliance to explore new job roles. This crucial partnership with SBI credit Cards for CSR is yet another step forward to drive equality of opportunity for women and empower them,” TSSC CEO Arvind Bali said.

The CSR project was envisioned under TSSC’s Livelihood Enhancement and Promotion (LEAP) Programme which caters to basic and intermediate skill building for upcoming and legacy telecom courses.

The main objective of the programme is to impart the confidence and competence to candidates in telecom trades to help support the rising demand for service, manufacturing, and retail job roles.

“We are doing our share to improve the status of women in the workforce. We are confident that this collaboration with TSSC will benefit women candidates in Haryana and assist them in moving beyond theoretical courses to become job ready. This is a one-year partnership, and we believe it will add to the momentum of initiatives already underway by the government and various companies to attract more female talent to the industry,” SBI Card Managing Director and CEO Rama Mohan Rao Amara said.

source: Financial Express

SBI all loan's EMI set to rise as lender hikes interest rates

State Bank of India (SBI) has raised the marginal cost of funds-based lending rate (MCLR) by 15 basis points across tenors, making most consumer loans costlier for borrowers. The benchmark one-year MCLR, which is used as base for fixing most of home loans, auto and personal loans, has been raised by 10 basis points (bps) to 8.05 percent, as against 7.95 percent earlier. Why are loans impacted by RBI's decision? Generally, when RBI hikes the repo rate, it increases the cost of funds for banks. This means that banks will have to pay more for the money they borrow from RBI. Consequently, banks pass on the cost to borrowers by increasing their loan interest rates, making EMIs costlier. As a result, both new and existing borrowers witness an increase in their loan interest rates.

Top Mortgage Lender, HDFC, Sees Home Loan Demand Despite Rate Hikes

 Demand for home loans is strong in India and is expected to pick up further over the next few months, the head of major housing finance firm Housing.

Home loans have grown by 16% as of end July compared to same period last year.

"The economy is buoyant, the feel good factor is high, affordability is better so people are comfortable buying houses even if rates are slightly higher," Keki Mistry, chief executive of HDFC, told Reuters.

The central bank has already raised rates three times by a total of 140 basis points in this financial year to tame stubbornly high inflation, which has remained above the central bank's tolerance band for several months.

Lenders have passed on the interest rate rises but Mistry said that there are no signs of stress among home buyers and collections on loan dues remain robust.

Interest rates are expected to rise further with economists expecting at least another 60 basis points by March 2023, according to a Reuters poll.

"The economy feel good factor is so strong that (we) expect that festival season will be very strong," Mistry said, referring to the September to December period.

"I don't think we will see too much of a rise in interest rate going ahead, some increase will be there but don't think that will deter the buyers," he said.

Economists concur, with Madan Sabnavis, chief economist of Bank of Baroda saying in a report late last month that home buyers would be prepared for fluctuating home loan rates.

Housing loans have grown by 16% as of end July compared to same period last year, according to the latest central bank data.

Demand is likely to be particularly strong from India's larger cities, where sales had slowed between 2016-2020 but where a revival is now visible, said Mistry.

HDFC Bank will offer a 10 Second Personal Loan Service at the end of this year

 The private lender HDFC Bank is expanding its offers to self-employed people who were previously not considered creditworthy in addition to providing loans to everyone in just 10 seconds. Now, the private lender wants to raise credit exposure to customers who are self-employed, who make up barely 5% of the market.

The 10-second loan service is something that HDFC Bank, the largest private lender in India, wants to make available to everyone, even people who don’t have bank accounts. The bank has been able to provide 10-second loans for existing customers over the previous six years and has been a paradigm pioneer in this area.

By year’s end, we intend to release the product to the larger open market for personal loans after providing service delight to our current clients.

The HDFC Bank is increasing its offers to self-employed people who were previously not considered creditworthy in addition to providing loans to everyone in just 10 seconds. Now, the private lender wants to raise credit exposure to customers who are self-employed, who make up barely 5% of the market.

The private lender has 12 million pre-approved loan customers across all of its products and has established an infrastructure basis throughout 650 districts in India to disburse unsecured loans.

At Rs 1.48 lakh crore, personal loans made up the greatest portion of retail loans, while 10-second loans made up the highest portion as of the end of June 2022.