Badrul Ahsan :Interest rates on home loans have plunged into a record low raising hope for a boom of property market after a prolonged slump, said money marker experts.They said that adequate liquidity with the banks and non-bank financial institutions (NBFIs) generated a whim for them to go for aggressive lending operations at rates as cheaper as possible, particularly in the high-demand property sector.The private commercial banks and the NBFIs involved with home loans cut down their rates by 2.0 to 3.0 per cent in recent months, mostly effective from this February, officials involved with the issue told The New Nation on Thursday.They said that lending rate on home loan by some private commercial banks came down to single digit – 9.0 to 9.50 per cent. Lending rates charged by the NBFIs also fell by 10.50 to 11 per cent, down by 2.0 to 3.0 per cent from previous rates.”We are now charging as low as 10.5 per cent,” said HS Tareq Ahmed, Head of Treasury at the IDLC Finance.Executives of most of the banks and NBFIs who have yet to adjust their lending rates downward said that they would revise the rates soon, he said.According to sources at private commercial banks, to attract property loans, many banks are also taking over loans owed to other banks by borrowers and NBFIs at lower-rated interest. Selim RF Hussain, Managing Director and CEO at BRAC Bank, told The New Nation that they have adequate liquidity to lend and that they would go for aggressive banking. “We’ll compete aggressively on the property market from now on,” he said about the changes taking place in the banking arena in the present context. “We’re now on a reduction spree,” Nurul Amin, a senior banker and Managing Director at Meghna Bank Ltd said. This, he said, is due to the excess liquidity with the banks. Banks are searching for safe and potential investment areas. He also said investment in property has some technical advantages over other modes of investment. “Look, the provisioning is low with the property investment as its base for provisioning is low,” he said. He pointed out that property prices also have been reduced, standing at rational levels now, encouraging the banks to cut the rate of interest on the property loans. Nurul Amin, who had served the NCC bank as Managing Director earlier, said, his bank also reduced it to a plain 12 per cent from the previous rate of 14 per cent, meaning no processing and other charges during the disbursement of loans. “This cut will give a relief to the home loan seekers,” said an official at the Standard Chartered Bank. Many consider such trimming down a result of cuts in policy rates in the latest monetary policy statement announced for this January-June period. Meanwhile, people in the Real Estate and Housing sector said such cutbacks on lending rates would help boost the sector. But they said the provision of questioning on the sources of money should be eliminated to give the sector a real boost. Tanveerul Haque Probal, Managing Director at Building for Future, said: “This is a good sign.” He expressed the hope this would help make vibrant the sector that remained dull for a long. According to REHAB (Real Estate and housing Association of Bangladesh), the real-estate and allied sector contributes 7.2 per cent or around Tk 250 billion to the economy.
