Real Estate India And Loans

Three more banks jack up rates

nathen — Thu, 12 Apr 2007 11:05:21 +0000

Public sector lenders Punjab National Bank, Union Bank of India and Oriental Bank of Commerce today announced 75 bps increase in their prime lending rates (PLRs). The hikes will be effective from April 16. All the three banks have decided not to raise interest rates on home loans.

Citing rising cost of funds, PNB increased its PLR to 13 per cent from 12.25 per cent to protect its net interest margin (NIM) and guard profitability. The revised PLR will be applicable to all existing and new borrowers, it said. Oriental Bank of Commerce raised its PLR by 75 basis points from 12.50 per cent to 13.25 per cent. The bank attributed the decision to the recent hike in Cash Reserve Ratio (CRR) and increase in cost of funds. Union Bank’s PLR has risen to 13.25 per cent from 12.50 per cent. “The increase in the PLR will help improve spreads and the bottom line of the bank,” Union Bank said in a statement.

State Bank of India , the country’s largest bank, raised its PLR by 50 bps to 12.75 per cent last week, including on existing home loans. Bank of Baroda had also raised its PLR by 75 bps to 13.25 but decided to increase the interest rates on existing home loans by only 50 bps.

ICICI Bank, the second largest bank, has increased lending rates by 100 basis points revising upwards its consumer PLR to 12.75 per cent and corporate PLR to 15.75 per cent. PNB said it will review home loan rates separately. Public sector banks, which are not increasing interest rates on their existing home loans, are likely to take a view after a meeting called by the Finance Minister P Chidambaram.

Bangalore Rentals on the Downside

nathen — Fri, 23 Feb 2007 09:00:03 +0000

Real estate happens to be one of the key aspects playing a crucial role in development of India’s garden city, Bangalore. With property here seeing appreciation quite rapidly, there is a contradictory situation for commercial property, which has seen a drop of over 30% in the last one year. Whitefiled, a suburb of Bangalore has seen property prices shooting up consistently. However, a correction has taken place in the IT neighborhood. There are some connectivity related problems accountable for the scenario. In addition, oversupply is also believed to be another major reason.

This year, a balance between demand and supply has not been achieved. Commercial absorption in Whitefield stood at a little over 2 million sqft last year. The supply situation is pegged at over 6 million sqft while demand continues to be at 2 million sqft. This marks the difference of exactly 4 million sq ft. Oversupply is considered to be an often occurring situation in Indian metropolis.

Likewise, the infrastructure seems to have lost pace with the real estate growth. With upcoming IT centers mushrooming away from the two main IT clusters, Electronic city and Whitefield, campus developments led the rentals to slip in Whitefield in order to grab the attention of major IT firms.

Sarajpur Road and Old Madras Road hold position among emerging IT centers. Here, accessibility is believed to be much better as compared to Whitefield. Consequently, the going rate in the case of commercial rentals in Whitefiled, which stood at around Rs 30 per sq ft a year ago for property falling under the category of ‘A’ grade dropped to Rs 20 per sqft in the present day.

Earlier, the rentals used to hover at Rs. 50 per sq ft. whereas they are still at Rs. 44 sq ft today. The interest in Whitefield is lower nowadays. Connectivity is a major issue for those who have to commute to and from Whitefield and surrounding areas.

Getting Loans get Tougher

nathen — Thu, 01 Feb 2007 09:55:45 +0000

Getting a home loan in India is no more an easy task from now onwards. Reserve bank of India has released strict directives for all the banks to check whether a housing loan is being sought for an authorized structure. Also, the responsibility to ensure that the construction is being carried out in accordance with the sanctioned building plan will fall with these banks.

As a follow up of the orders from the High Court, banks are advised to comply promptly with instructions in this regard without failing while considering the applications for home loans.

These given directives vary according to the type of application. In case of the loan application for buying constructed property, applicant will need to submit a declaration form to the bank stating that the construction of the built up property is going in process with the sanctioned plan.

Likewise, in case of housing loan application for building construction, banks are required to get a copy of the sanctioned plan from the knowledgeable authority in the name of the person applying for such credit facility. Other legal formalities include a signed affidavit cum undertaking by the borrower according to which the borrower shall not violate the sanctioned plan.

Morgan Stanley and Oberoi Const. Deal

nathen — Tue, 23 Jan 2007 09:39:02 +0000

Satisfied with Mumbai’s Oberoi Construction vision, enterprise and execution of projects, Morgan Stanley has opted to invest Rs. 675 crore in return for a 10% stake in the 30 year old unlisted company.

Oberoi Construction sells almost 1000 apartments a year, and is engaged in the construction of commercial properties as well in the city. On the anvil are plans to expand into construction of hotels, shopping malls, hospitals and educational centres. Sources at Oberoi disclosed that this investment would help the company in timely execution of its ongoing projects, enabling also a liquidity of $1 billion in the next 3-4 years. The company holds 15 million sq. ft of property in Mumbai. In the pipeline are ventures in Pune, Hyderabad and Bangalore for which land has to be acquired.

Kotak Mahindra Investment Bank which facilitated this largest ever PE fund deal, valued the company at $1 billion. Morgan Stanley was in the race along with 14 other funds, which included Blackstone, Carlyle and GE amongst others. Anand Madduri, Executive Director, Morgan Stanley, has been appointed on the board of Oberoi Construction

Morgan Stanley is estimating an annual return of over 30% from this investment. It had recently invested Rs.300 crore in Mantri Developers. The last few months have seen a burst of activity on the part of investment funds to invest in real estate, which is slated for a sustained rate of 35 to 40%.

The real estate saw private equity investment coming in from Siachen Capital with $100 million in Bangalore’s Nilesh Estates, HDFC Real Estate with $35 million in Ansals’ IT City, and $31 million in Pune’s Vascon Engineers. Hiranandani Constructions, the Rahejas and Unitech raised $2.3 billion from overseas recently. Farallon Investments, USA, invested Rs.1429 crore in 4 real estate companies in partnership with L.N.Mittal

There are over 20 companies waiting to park their funds in real estate in India – with ICICI Realty with $1billion and Kotak Mahindra with $500 million amongst others.

Credit Scores – Beware

nathen — Wed, 17 Jan 2007 06:34:51 +0000

Most people know that a credit score is important when it comes to getting a mortgage. But did you know that it also could affect your ability to get a job? Or rent an apartment? Or get a good rate on car insurance?”The credit score is really the key to your financial life”

Credit scores are now used by a host of people and businesses, including lenders, employers, insurance agents, landlords and utilities. That’s why it’s so important to maintain your creditworthiness – even when you are in your 20s and 30s, have just launched a career and are still paying off student debt.

There are several scoring methods, but the most common is the FICO score, developed by Fair, Isaac and Co., a leading credit analysis and risk management firm. FICO scores can range from 300 to 850. Half the population scores above 720, while 15 percent come in below 600, according to Andy Jolls, vice president for Fair Isaac’s MyFICO.com, which sells credit-monitoring products and provides information on scoring.

Simple mistakes, such as missing a single bill or a loan payment or charging to the limit, stay on your record for years and can cost you in many ways, including tens of thousands of dollars in higher interest rates over the life of a loan.

“You can improve your score within a few short months by starting to pay your bills on time and keeping your balances low”

Credit Cards – A Brief Intro

nathen — Wed, 29 Nov 2006 07:56:06 +0000

Credit Card Terms:

A credit card is a form of borrowing that often involves charges. Credit terms and conditions affect your overall cost. So it’s wise to compare terms and fees before you agree to open a credit or charge card account. The following are some important terms to consider that generally must be disclosed in credit card applications or in solicitations that require no application.

Annual Percentage Rate:

The APR is a measure of the cost of credit, expressed as a yearly rate. It also must be disclosed before you become obligated on the account and on your account statements. Some credit card plans allow the issuer to change your APR when interest rates or other economic indicators – called indexes – change. Because the rate change is linked to the index’s performance, these plans are called “variable rate” programs.

Credit Card Free Period:

Also called a “grace period,” a free period lets you avoid finance charges by paying your balance in full before the due date. Knowing whether a card gives you a free period is especially important if you plan to pay your account in full each month. Without a free period, the card issuer may impose a finance charge from the date you use your card or from the date each transaction is posted to your account. If your card includes a free period, the issuer must mail your bill at least 14 days before the due date so you’ll have enough time to pay.

Credit Card Annual Fees:

Most issuers charge annual membership or participation fees.

Credit Transaction Fees and Other Charges:

A card may include other costs. Some issuers charge a fee if you use the card to get a cash advance, make a late payment, or exceed your credit limit. Some charge a monthly fee whether or not you use the card.

Other Credit Card Costs and Features:

Credit terms vary among issuers. When shopping for a card, think about how you plan to use it. If you expect to pay your bills in full each month, the annual fee and other charges may be more important than the periodic rate and the APR, if there is a grace period for purchases. However, if you use the cash advance feature, many cards do not permit a grace period for the amounts due – even if they have a grace period for purchases. So, it may still be wise to consider the APR and balance computation method. Also, if you plan to pay for purchases over time, the APR and the balance computation method are definitely major considerations.

You’ll probably also want to consider if the credit limit is high enough, how widely the card is accepted, and the plan’s services and features.

Useful Credit Card Tips:

Keep these tips in mind when looking for or using a credit or charge card.

Shop around for the plan that best fits your needs.
Make sure you understand a plan’s terms before you accept the card.
Hold on to receipts to reconcile charges when your bill arrives.
Protect your cards and account numbers to prevent unauthorized use.
Draw a line through blank spaces on charge slips so the amount can’t be changed.
Keep a record – in a safe place separate from your cards – of your account numbers, expiration dates and the phone numbers of each issuer to report a loss quickly.
Carry only the cards you think you’ll use.

Credit card debt consolidation

nathen — Thu, 23 Nov 2006 05:59:46 +0000

The main problem that every one face is credit card debt. Because of the high credit card interest rates and Penalty fees you find it difficult to pay the debt. To put a stop to this, you require refraining from using the credit cards and start making more than the minimum payments because sometimes even the minimum payments won’t cover for the amounts added due to interest, fees and other costs. That’s when Debt Consolidation Loans become helpful.

To put a stop to this, one needs to refrain from using the credit cards and start making more than the minimum payments because sometimes even the minimum payments won’t cover for the amounts added due to interest, fees and other costs. However, this is not always possible and so; another source of finance must be used to cope with this problem. That’s when Debt Consolidation Loans become an invaluable aid.

The replacement of multiple loans with a single loan, often with a lower monthly payment and a longer repayment period. also called consolidation loan.

Consolidating Credit Card Debt

A debt consolidation loan will let you cancel your credit card balances in full so they stop generating high amounts of interests. You’ll only have to worry about a single monthly installment i.e. the debt consolidation loan payment. The interest rate charged for the money will be considerably lower and the repayment program will be flexible enough so you can easily afford the monthly payments.

So, think next time of debt consolidation loan for your Credit card before its tooo late… right??