house financing – LIC Housing Finance to venture into rural market

LIC Housing Finance Ltd plans to venture into rural housing loan market with a ticket size of Rs 4-5 lakh. The mortgage lender, which is expected to float a separate subsidiary company for this purpose early, next year, sees huge potential in rural housing to expand business.

According to a source, the LIC Housing Finance management sees surge in growth potential in rural areas where virtually there is no competition.

Analysts suggest, housing loan penetration is pegged at 37% in urban areas while it is only 7-8% in rural belts.

The regulatory norms are also different for giving housing loans in rural areas which forms around 70% of the country’s population.

Loans in rural areas can be disbursed under relatively liberal rules. For example, income statement is compulsory for a salaried borrower in cities and towns but in rural area does not require such a provision. A further, locational advantage like water supply, electricity and road ways are pre-requisites while providing loans for a particular house location in urban area but is not applicable in rural areas.

“Doing housing loan business in rural area requires completely different business model. Complexities are relatively less. You don’t need high infrastructure cost. Office set-ups have to be rural-oriented wherein rural masses feel comfortable to interact with officials,” said the LICHFL source who refused to be quoted.

LICHFC, according to the source, would roughly spend Rs 1 lakh in setting up a single office in such areas for doing its business.

“The management, which finds the volume generation as the only hurdle in this venture will aggressively use its age-old popular brand of LIC to market the product. The company is hopeful to generate enough credibility among rural people through the brand. It will help them get good business. In line with growing focus on financial inclusion rural housing business is anticipated to add more prospects to the company,” said the source.

When contacted by FE, the director and chief executive R R Nair, however, did not divulge anything saying “we do not comment on market speculations”.

LICHF has posted a 71% rise in net profit to Rs 212 crore for three months ending June, 2010. Profits were driven by a 36% increase in the loan book which now stands at Rs 40,030 crore.

house buyers – First-time house buyers still finding it tough to get into the
market

Buying a house in the current housing market is tough. Becoming
a first-time house buyer is very tough. Recent research by the
Chartered Institute of Housing
Cymru (CIH) has show just how difficult it has become for
people in Wales aged 20-39 to get a foothold on the housing
ladder, as the gap between house prices and wages increases.

The study showed that young working households in Wales
currently earn on average £27,039, however the cost of a two
bedroom house is almost four times that at £107,864. In some
rural areas the situation is even worse, with house prices
around five times the average household income. The most
expensive areas according to the survey were Monmouthshire
(£147,084), Cardiff (£142,773) and the Vale of Glamorgan
(£138,019).

A representative of the CIH said “Young households are being
forced out of the property market across the country … It is
particularly bad in areas where wages and salaries are low yet
demand for homes is high.”

However the news is not all bad for first-time buyers in Wales,
as the Royal Bank of Scotland has announced that the Rhondda
town of Ferndale has been crowned the most desirable investment
spot for new home buyers in the its first-time buyer property
index.

A spokesperson from The Royal Bank of Scotland said, “The index
reveals that for savvy house hunters, the most crucial aspects
determining future return on investment are the low house price
to high income ratio and the recent house price growth rate of
the area, alongside any regeneration prospects.”

Ferndale topped the chart despite earlier this year gaining the
dubious distinction of coming bottom in a house price league of
1,414 Welsh and English towns based on prices since 2000.

In the wake of the recent market upturn in the town, it is now
boasting a large number of “for sale” and “sold” signs and
looking to attract more first-time buyers.

According to The Royal Bank of Scotland, “Buying in an
up-and-coming property hotspot can help first-time buyers climb
the ladder faster to their ideal property or location in the
future”.

Housing organization Rightmove believe that with property
prices in Wales bucking the current UK decline in house prices
and outstripping the rest of Britain by more 7% and correcting a
previous 6% price slump, the housing market in Wales is starting
to look brighter for sellers.

Rightmove also declared last month that almost 120,000 sellers
in England and Wales cut their asking price in the four weeks up
to 6th August and stated that this reflected that it is
currently a buyers’ market as, “There is too much unsold
property still available to expect anything other than a
continuation of static asking prices this year.”

Rightmove said that with house prices doubling over the last
five or six years and mortgage rates having also recently risen,
the only affordable option for some people is to rent property
rather than buying.

Isabelle Kassam writing for Moneynet believes that
since, “Interest rates fell recently but mortgage lenders have
been slow to pass the reduction on to consumers. Borrowers who
are holding out for an even lower fixed rate are playing an
anxious waiting game.”

The situation does not look good for those who are presently in
rented accommodation hoping for the climate in the housing
market to get better, as the Royal Institution for Chartered
Surveyors (RICS) has revealed that rents have risen at their
fastest rate for four years. This is rubbing salt into the
wounds of would-be first-time buyers, as tenant demand is rising
on flats as prospective first-time buyers struggle to afford
their first property. A vicious circle has been created that is
affecting many prospective buyers. While not being able to
currently afford to buy, the higher rents are preventing the
hopeful first-time buyers from saving enough to get out of the
rented accommodation trap.

Mr Shipside of Rightmove indicated that those being hurt most,
“really is first-time buyers, and there is a lot of demand for
flats. Two thirds of tenants are actually under 35, so they are
the people that are being hurt by rising house prices and rising
mortgage rates.”

Related House Buyers Articles

San Diego foreclosed homes in 2009 were expected to be at the forefront of the 2009 economic recovery. The San Diego real estate market is known for being competitive, as buyers generally outnumber the number of desired homes. In 2009, tax incentives and low prices pushed many buyers and investors into action, buying foreclosed homes in particular. Local economic experts predicted that this was an excellent indicator of recovery of the local housing market. In the summer of 2009, prices on foreclosure homes and traditional real estate was down, while sales were up, spurring buyers and investors to take another look at foreclosed properties in the area. The Housing and Economic Recovery Act of 2008 seems to be a big factor in the recovery of the San Diego foreclosure and traditional real estate market. The act offers an $8,000 tax rebate to qualified first-time homebuyers. When combined with the already low prices of foreclosure properties, more buyers are able to use the incentive to buy rather than rent in the area.

The programs that compel lenders to hold off on foreclosing homes owned by troubled homeowners is also having its impact on foreclosure listings in San Diego, say experts. The moratorium imposed on lenders in 2008/2009 means that fewer foreclosures are available than might otherwise be on the market, and as a result many foreclosures – even those that would have languished on the market a few years ago – are being snapped up by ready buyers.

There is a lot of demand in the market for San Diego foreclosed homes in 2009. Even lower-end foreclosures are being bought. Many homebuyers – even first-time homebuyers – are also becoming more savvy about the foreclosure market and foreclosure listings, say experts. This has meant that it is not only experienced buyers and investors who are taking advantage of foreclosure properties in the area.

Resource Box: Jonatas Leonel Oliveira Silva has helped many buyers take advantage of the lower prices on the San Diego foreclosed homes market. Through ForeclosureDeals.com, he has helped people beat the competitive San Diego housing market with unbeatable prices.

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National Lumbers Back Into Black.: An article from: Arkansas Business

For the past years, the number of houses listed for foreclosure has been increasing. This is because people have been losing homes brought by unemployment and difficulties of paying the mortgage. This has had bad effects to the real estate industry. Although the government has been sending out stimulus funds to help improve housing market, still real estateâ??s progression would not be anything but sluggish (not when people still find it hard to catch up with their monthly mortgage and jobs are unavailable).

Of course, it does not mean that aspiring homeowners should lose their hope. Because of the houses that were foreclosed, it paved a way to let few persistent home buyers and investors to purchase houses at an economical deal. But amidst the good news lie hesitations by the public. Certain downsides have been pointed in buying foreclosure homes.

It can be confusing whether to proceed in buying these houses. However, as a buyer it is part of your decision-making to weigh the good and the bad.

To help you out, here are the good and bad points that you can study before buying foreclosed homes.

 

Cons

Great opportunities await if you are able to purchase a myriad of houses that you can use to engage in a rental business. This opportunity is made possible because foreclosed homes can be purchased at a low price. There is even more room for negotiations or requests for discounted prices. The outcome is usually favorable to you. 

 

Pros

Buying the house is not directly to the buyer. This means you have to wait for auctions or for the bank to put it up on sale. Lucky for you if there are no other takers but expensive homes with basement prices would naturally give you more competition. Aside from that, you would have to shoulder the repairs because institutions would not generally fix the place up for display. If it happened you purchase a home with stubborn owners who defy eviction, this could be a problem. Researching can be quite difficult. Therefore, if the owner owes a great amount with regards to property tax that will become your problem.

 

From the looks of it, people would grab the chance of buying these houses because of the lower purchase price. There is nothing wrong with that since it is normal for consumers to look for an economical deal. However, sometimes there is just too much drama and legal concerns involved.

If there is no stopping you, the best thing to do is research. Know the process involved in buying them. Gather more information about the house if you have the time. Do a title search to uncover undisclosed liens or taxes owned. You can also consider getting Real Estate Owned properties rather than the auctioned ones (to be sure that there are no problems in papers and titles). Lastly, buy houses that are vacant to avoid legal expenses involved in the eviction process.

If, otherwise, convinced that this is not for you, consider other options in buying homes. Try obtaining them through short sales or pre-foreclosures.