Home-Loan Curbs to Deepen Liquidity Crisis for Indian Developers
- Regulator to limit payment plans developers use to push sales
- Shadow banks with exposure to sector could also be affected
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The liquidity crunch facing property firms and their lenders in India may deepen after the National Housing Bank restricted certain mortgage-payment plans that developers typically use to push sales.
The nation’s housing regulator on Friday advised home financiers to cease offering advances for so-called subvention plans. Such plans are staggered or back-end payment contracts where the builder pays the interest on the buyer’s home loan for under-construction projects until the property is ready. That allows home purchasers to delay interest payments while at the same time providing developers a steady funding stream at lower interest rates.