Banks and Non-Bank Financial Institutions (NBFIs) believe that the potential mortgage lending activity in the housing and real estate sector is growing rapidly thanks to the expansion of the affluent class and the ability to buy growing population.
Bankers and associate officials attending an ongoing five-day “REHAB 2021 Fair” at the Bangabandhu International Conference Center told the Daily Star yesterday.
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Although the data claims could not be immediately substantiated, the conversation revealed that financial institutions now have portfolios of potential disbursements five times larger than they did five years ago.
A total of 13 banks and NBFI are participating in the fair, where a maximum of Tk 2 crore can be used as a home loan. The land or apartment remains mortgaged until the loan is repaid.
Rahat Jamil, head of distribution at IPDC Finance, said they started offering home loans in 2016 with Tk 100 crore and that figure reached Tk 686 crore this year.
“We provide home loans to clients who have a minimum sustainable monthly income of Tk 40,000,” he noted.
The IPDC offers 7.99% interest-rate home loans marking the fair and already five clients have secured cash loan approvals, he said.
Mr Sirajus Saleken, head of mortgage management and developer relations at Brac Bank, said they were offering 7.5% mortgage interest at the fair.
He said that employees, businessmen and teachers with monthly incomes between Tk 20,000 and Tk 1.30 lakh could qualify for a home loan.
According to him, landowners who want to construct a building or a sheet metal structure could benefit from a loan from the Brac Bank.
“We provide home loans to clients of reputable companies whose projects are under construction, while clients of ordinary developers can get loans after the apartments are registered,” he noted.
Saleken sees huge potential for mortgage lender products as the number of loan seekers has increased alongside the development of the real estate industry with increasing spending capacity of the population.
Sujit Saha, director of business development at Standard Chartered Bank, said clients with a minimum monthly income of Tk 78,000 can qualify for home loans of up to Tk 2 crore for up to 25 years.
The bank, like others, provides 70 percent of the value of the assets in the form of a loan, he said.
Saha said they were giving home loans at a 9% interest rate but offered 1.5% cash back marking the fair.
He said the number of home loan clients has grown steadily and significantly over the past five years.
Saha said mortgages are less risky because proposals are approved through proper assessment of clients’ income.
Mohammad Didar Hossain, senior loan officer at Delta Brac Housing Finance Corporation, said they give ad hoc approvals to loan proposals from apartment buyers.
He said they received a number of inquiries from customers.
They also cut the interest rate to 7.5 percent from the fair’s 7.99 percent mark and also offered a 50 percent discount on processing fees.
According to him, they can provide a maximum of Tk 6 crore depending on the client’s wallet.
Md Kamruzzaman, head of the retail banking division of Mutual Trust Bank, said they provide loans at 7.5% interest rate to clients with permanent income of Tk 40,000 or more. .
They were a little different, giving loans to clients up to the age of 70. But it also depended on financial conditions. Almost all banks and NBFI consider an age limit of 65 for granting loans.