Finally Reserve Bank of India has allowed mortgage guarantee companies to commence the business of providing mortgage guarantee in India. Mortgage guarantee firms would provide guarantee to a home loan lending institution against default. This will provide a cushion to banks and financial institutions.
Since a mortgage guarantee company will provide guarantee against any default, bankers risks will go down. At present, bad loans account in home loan is quite low. So, the cost of buying insurance from the mortgage guarantee company may not be very high. This may result in decline in home loan rates and increase credit flow to the housing sector.
Tuesday, February 19, 2008
Mortgage Guarantee cos entry may soften home-loan rates
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4 comments:
I agree. But operationalisation of such companies will take some time. So in short term home loan rates may not soften
It may be a boon for banks also.Guarntee fee to be nominal.
may be a boon to housing loan sector. Fees to be nominal.
The fees should be nominal. It may be helpful for the banks in the home loan sector.
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