LICHF to withdraw special plan
LIC Housing Finance, the second largest mortgage company in the country, will soon withdraw its special scheme where loans are available at a fixed rate for the first five years. The company came out with a reworked scheme in view of the rising interest rates.
The fixed and floating rate combination product is the only one of its kind by any lender. Loans up to Rs 30 lakh are available at 9.9% fixed for the first five years. Interest on higher value loans go up to 10.25%. The company has seen a surge in individual loans because of this fixed-floating product. “In a growing interest rate situation, borrowers want some certainty on their interest liability at least for the initial years,” said VK Sharma, MD, LICHFL. However, given rising interest rates this product has been putting some pressure on LICHF’s margins. Sharma said given the popularity of the product, the company would try and continue to have a product with a fixed rate component.
The company, which announced its results on Thursday, said that net profit for the fourth quarter was up 47% at Rs 315 crore as compared to Rs 214 crore last year. Profit for the whole year went up by the same rate at Rs 975 crore
LICHF, which went slow on loans to developers after the bribes-for-loans scandal last year, has been aggressively disbursing individual loans. Loans disbursed to individuals rose 71% during the quarter ended-March to Rs 6,461 crore from Rs 3,786 crore last year.
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