2 Aug 2012, ET Bureau.
KOLKATA: National Housing Bank has slashed its refinance rate by up to 100 basis points for home loans not exceeding Rs 5 lakh. A 100 bps is 1 percentage point.
NHB said it has reduced the rate to promote affordable housing finance for low income people in urban areas. It started a special refinance scheme for them since July this year.
It is expected that a lower refinance rate would prompt primary lenders like banks and specialised housing finance companies to reduce their lending rates for economically weaker section.
Low income people is one who earns less than Rs 15,000 a month. Workers in the informal sector are eligible for the facility.
The apex housing bank provides refinance support to primary lenders against their actual lending.
It has reduced the refinance rate to 9% for loans up to Rs 2 lakh and 9.25% for loans between Rs 2 and 5 lakh. The refinance rate was flat 10% for loans up to Rs 5 lakh prior to this. NHB will offer the refinance at fixed rates for 5 to 15 years.