There are chances that interest rates on home loan may come down in the next three quarters, but lenders are offering a lower rate of interest on fixed loans, says Sukanya Kumar, professional adviser to banks and borrowers.
Into the nucleus of home loan and financial markets for the last decade, Sukanya Kumar has been instrumental in creating RetailLending.com, an advisory for financial and home loan solutions in India. Her instinctive understanding of credit policies, and an array of home loan products offered in the market, her perception of the consumer needs for loans, and her aptitude to advise both the banks for their products and borrowers on their choice of loan, is coming in handy.
Sukanya Kumar is also a professional adviser to various lending institutes for mortgage marketing services that was a robust success in Bangalore & Mumbai.
Virtual Group, established nearly 14 years ago for home broking business, ventured into home loan advisory support through RetailLending.com.
Sukanya Kumar spoke to The Hindu-HABITAT about the home loan scenario and the demands in the real estate industry. Excerpts…
Understanding the relationship between real estate and the banking sector and the flow of currency between them would help us deal better with home loan transactions, isn’t it?
Real estate and banking are closely related. Substantial amount of currency coming into the real estate industry is from the banking industry, primarily from the home loan segment. Most of the property that are stuck in the under-construction stage lack funds for the raw material. These funds are pumped in by the banks that have sanctioned loans to the home buyers. Hence, it is integral for individuals to understand that they need to take a quick and informed decision as far as their home loan is concerned because a delay in the initial stage can delay the entire process of construction. On the other hand, home loans are also a good option because the banks do the due diligence on the builder and the property, ensuring that one invests in a project with clear title. This ensures safe investment.
You say RetailLending.com is the first single window home loan solution provider, but there always have been advisory wings attached to real estate online portals. Where do you differ, or where does your activity get stretched to?
At RetailLending.com we direct our clientele to customised solutions. In my decade-long experience in the industry I have realised that the home loan sector is like investing in the share market. This makes it integral for the customers to understand repercussions of investing in certain products. Also, banks tend to keep certain products exclusive for ‘certain type’ of borrowers. This is where RetailLending.com as a brand plays its role by monitoring people’s complete home loan life-cycle. We enable the borrowers to take home loan investment decisions that would take care of their short-term and long-term financial requirements. In terms of banks, we market, counsel and source the business for them. Our interaction with the customers enables us to understand their need and expectation from home loan products. We share this insight with the banks which enables them to define and improvise their current products and also design products in future.
Customers do not realise that they need to have a bird’s eye view on their investments prior to buying a home loan. Moreover, there are issues such as education expenses, household expenses and the possibility of spouse retiring from work that need to be kept in mind. We primarily bridge the communication gap between the customer and the bank, as banks tend to only answer questions that customers ask and these answers may not be sufficient to take a call on the right product.
What is your role vis-a-vis banks and financial iInstitutions?
We play the role of an advisory or intermediary between banks/financial institutions and borrower. It is integral to know that one cannot take a decision based on another person’s experience. This is primarily because each person’s requirement is as unique as his finger print, hence it is important to match one’s requirement to the product, and that is the role we play. Moreover, we are influencers and partners to our customers throughout the loan period which means in case a person purchases a loan from bank A and in two years bank B launches a product which can benefit him, we offer him bank B’s product for his new purchase. Thus, ensuring the customer’s long-term and short-term financial goals are taken care of.
In the larger picture, is India heading towards healthier times in the lending sector, as people are lured into taking loans, buying homes and getting saddled in the EMI culture, just like what the U.S. went through?
The investment cultures in India and the U.S. are as different as chalk and cheese. During recession in the U.S. and slowdown in India, this had an impact on the employees of a majority of MNCs operating in India. On the other hand, the people working for Indian companies were not impacted majorly. This is largely because of our innate attitude towards investment where we save before we spend. I observed that a large number of people during the U.S. recession wanted to buy property under value proposition because they had additional liquidity and wanted to make most of the opportunity. Though I agree that there is a certain culture imbibed by the youth in India while going for personal loans and credit cards, when it comes to investing in property, it is more of a family decision and never an individual one. Banks also prefer giving loans to people who have job stability and minimum three years of work experience.
Do you think it is the time for people to invest in homes? Do you expect the interest rates to come down?
It is the norm for us to wait for the interest rates to go down and then invest in property. However there is no guarantee that the rates would not fluctuate after they have taken the loan. In fact, in India there has not been a scenario where the home loan rates have been stable for a long time. Over the years borrowers have seen a fluctuation between seven and 14 per cent. Also, one can never assume that if one borrows at a lower rate it will remain so for a long time. In such a situation, my advice to home buyers would be to invest in a home loan product that matches their financial goal and investment pattern as one cannot predict or control the swing in rate of interest in our country.
Since the rates have stiffened quite a bit we are expecting the rates to either be stable or even come down in the next three quarters. The fact that lenders are offering a lower rate of interest for fixed loans as compared to floating loan also supports the root of this idea. However it would be interesting to see the impact of Lok Sabha elections on the industry.