New Delhi: There is good news for thousands of homeowners who have availed of loans from any of 54 housing finance companies (HFCs) with the National Housing Bank banning levy of prepayment penalty.
NHB, which is the housing finance regulator, has also asked HFCs to ensure that all borrowers pay the same interest rate, irrespective of when the loan was taken.
The two decisions, notified on Wednesday, will cover all HFCs, including HDFC, LIC Housing Finance and Dewan Housing Finance. They come into effect immediately, NHB chairman and managing director RV Verma told TOI.
By notifying the new rules, NHB has initiated a step that RBI has been contemplating for a while.
Although the banking regulator has discussed the issue with banks and ombudsmen, it is yet to notify the norms. 1/3rd of borrowers to benefit
New Delhi: NHB’s banning of pre-payment penalty will benefit only 33% of the Rs 5 lakh crore housing finance market. It said that housing finance companies (HFCs) will no longer levy any fee on floating rate loans.
In case of fixed rate loans, it has made a distinction and only those borrowers who pay from their “own sources”, such as savings or even loans from relatives, will be exempted from payment of penalty. In case they are shifting to another bank or HFC, the penalty will be applicable.
While a similar advisory was issued last October, NHB has said that any violation will attract penal action. The latest step will enable several borrowers to now shift their loans to banks or HFCs that offer home loans at a lower rate. Banks and HFCs levy pre-payment penalty of up to 4%, which often resulted in borrowers continuing to pay higher rates.
“The idea is to protect the interests of borrowers, it will give them freedom to exercise choice,” Verma said.
HFCs refused to comment on the issue, saying they were studying the matter. On uniform interest rates, NHB’s letter was in the nature of an advisory and did not talk of any penal action. “It is accordingly advised that the HFCs should ensure uniformity in the rates, on floating rate basis,” the letter said. TNN
Times of India | Page: 1 TIMES NEWS NETWORK, NEW DELHI | October 20, 2011
