Realty stocks edge higher as SBI, HDFC cut home loan rates

Ten realty stocks were up 0.6% to 20% at 15:19 IST on BSE after State Bank of India and HDFC on Thursday, 19 December 2013, cut home loan rates.

Anant Raj was locked at 20% upper circuit at Rs 65.30, HDIL (up 5.93% at Rs 50.90), Peninsula Land (up 4.55% at Rs 40.20), Indiabulls Real Estate (up 3.21% at Rs 67.45), Phoenix Mills (up 3.02% at Rs 227), DLF (up 2.74% at Rs 163), Unitech (up 2.68% at Rs 15.30), Oberoi Realty (up 1.79% at Rs 225), Sobha Developers (up 0.83% at Rs 305) and Godrej Properties (up 0.6% at Rs 166.50) edged higher.

The S&P BSE Realty index was up 2.77% at 1,406.48. The realty sector index outperformed the Sensex, which was up 1.83% at 21,091.04.

The BSE Realty index had outperformed the market over the past one month till 19 December 2013, advancing 0.92% compared with the Sensex's 0.87% fall. The index had, however, underperformed the market in past one quarter, declining 0.62% as against Sensex's 0.3% rise.

A day after RBI governor Raghuram Rajan decided to hold rates, SBI on Thursday, 19 December 2013, slashed home loan rates by up to 35 basis points for new borrowers and has unveiled a further discount of 5 basis points for women customers. Loans of up to Rs 75 lakh would be available to fresh borrowers at 10.15% against the existing rate of 10.50%. For women borrowers, the rate of interest after an additional concession of 0.05% would be 10.10% for home loans of up to Rs 75 lakh. With regard to loans of above Rs 75 lakh, the new rate would be 10.30%. For women borrowers it is 10.25%.

HDFC, meanwhile, said that it has launched a "Winter Bonanza" for home loan customers effective Friday under which loans up to Rs 75 lakh will be available at 10.25% as against 10.75%. The mortgage company said that the new rates are valid for all new applications submitted before 31 January 2014.

The reduction in home loan rates by these two major lenders could lead to a revival of interest in the real estate sector, which has been hit by high prices amid a sluggish economy. Purchases of both residential and commercial property are largely driven by finance.

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