Rates for construction finance rise; LRD down as banks turn averse to lend

Construction finance rates are going up for property developers and lease rental discounting rates are falling as banks turn averse to lend for construction activities.

Lease rental discounting (LRD) as the names suggests is a loan pegged against the lease rentals and therefore considered as low risk loan. The rentals act as EMI payment. However construction finance is a function of market dynamics, developer finances, and therefore considered a higher risk product.

Construction finance rates have risen to 12.9 per cent in Q1 of the calender year 2020 from 11.9 per cent last year. Lease rental discounting rates or LRD