Interest rate on home loans
The below information compiled from the written reply of Minister of State for Finance to a question in Parliament on 6.8.2013…
1% Interest Subvention Scheme: To stimulate demand for credit for housing in the middle & lower income segment, a scheme of 1% Interest Subvention Scheme for Individual housing loans up to 10 Lakh and cost of the unit up to 20 lakh was introduced by the Government from 1st October, 2009. From FY 2011-12, eligibility under the Scheme has been increased for housing loan up to 15 lakh, where the cost of unit does not exceed 25 lakh. All States/UTs in the country, including rural & urban areas are covered under the Scheme.
The Scheme has helped in increased access to houses by individuals. The Status of disbursement made under the 1% ISS is placed below:
S. No. Disbursement for the Period Disbursement of subsidy
1 Financial Year 2010-11 38.54
2 Financial Year 2011-12 300
3 Financial Year 2012-13* 385.78
Cooperative Banks especially Urban Cooperative Banks (UCBs) are playing an important role in the house building loans. The outstanding amount of individual houses loans granted by UCBs as on March 31st of last 3 years are as under:
As on Outstanding Housing Loans
Further, NHB has, disbursed cumulative refinance of 844.51 crore to Scheduled Urban Cooperative Banks. As on date, refinance outstanding with UCBs was 264.57 crore.
The National Housing Bank (NHB), by offering lower interest rates on refinance for smaller housing loans, encourages the primary lending institutions to increase their housing loan portfolio in the lower loan size segments and also extends refinance at low rates under the Rural Housing Fund (RHF) scheme in respect of housing loans in rural areas to people belonging to weaker sections.
Further the NHB has recently launched a new refinance scheme known as Special Refinance Scheme for Urban Low Income Housing for extending refinance at lower-than-market rates to primary lending institutions in respect of their housing loans of upto 5 lakhs in urban areas given to beneficiaries with annual income not exceeding 2 lakhs. In order to ensure that the benefit of lower interest rates is passed onto the ultimate beneficiaries, the scheme provides for an on-lending cap over and above the refinance interest rate.