Mumbai, April 2: Axis Bank today launched Asha Home Loan — a new product targeted at the first-time home buyer in the lower income segment.
The country’s third-largest private bank is planning to target the 2.5 crore households who draw income of less than Rs 25,000 per month.
At present, the size of the housing finance segment in India is estimated at Rs 7 lakh crore worth of oustandings. But most players tend to focus on customers whose monthly income is above Rs 25,000 per month.
Jairam Sridharan, head of consumer lending and payments at Axis Bank, said one of the key attractions of the new product was that it would give loans for amounts as low as Rs 1 lakh and up to Rs 15 lakh in small towns (population less 10 lakh) and up to Rs 25 lakh in larger towns where the population is over 10 lakh.
Further, the equated monthly instalment (EMI) will be spread over a period of 30 years, which will put a stress-free repayment burden on the customer. The lender will extend finance for a house of even 325 square feet. Most home loan financiers stipulate that the house size should be at least 600 square feet.
The Asha Home Loans product design and structure is the outcome of an extensive research conducted by the bank on the lower income customers in India.
These loans are meant for customers with family incomes of Rs 8,000 to Rs 10,000 per month and above. Moreover, the customers can pool their family income instead of depending on an individual.
The Asha Home Loan, which is available to both salaried and self-employed individuals, can be taken in both floating and fixed rate options. It also entails simple documentation. While the interest rate for the floating rate home loan has been set at 10.75 per cent, it will be 11.75 per cent for the fixed loan.
“We see tremendous potential in the affordable housing segment. Customers with lower income level and aspiring to own their first house in the peripheral areas of tier1 cities or within tier II and III cities has largely remained untapped. Asha Home Loan will help to bridge this gap,” Sridharan said.
The State Bank of India today extended the date of special home loan rates for new and women borrowers beyond March 31 for an indefinite period.
Last December, the SBI had cut its home loan rates by up to 0.4 per cent for new borrowers and for women customers an additional concession of 0.05 per cent was offered. The special rates were made available up to March 31.