"This 7-year cycle is getting over"

"This 7-year cycle is getting over"

Sanjaya Gupta, Managing Director, PNB Housing Finance, talks to Teena Jain Kaushal and Priyadarshini Maji about the real estate market, interest rate movements and his expectations from the festive season

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Sanjaya Gupta, Managing Director, PNB Housing FinanceSanjaya Gupta, Managing Director, PNB Housing Finance
Priyadarshini Maji
  • Sep 5, 2016,
  • Updated Nov 15, 2016 5:18 PM IST

The only transmission has been of 68-70 bps. Credit is a big thing in our economy. Credit/debt markets are very narrow. There are not many opportunities for us to raise debt. Banks cannot lend to us below their MCLR rates. So, what is left is the bond market or NHB (National Housing Bank) finance.

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Also, a systemic risk will be created as most of our borrowings are at fixed rates and we are lending at floating rates. It is very good for the lending institution if rates move up because you have already borrowed at a fixed rate and the lending rate is variable. But what happens when the rates comes down, as is happening now? Every day one cannot change the borrowing basket. Going for a fixed interest rate is safer; it costs you a little bit premium but that premium is worth it.

The only transmission has been of 68-70 bps. Credit is a big thing in our economy. Credit/debt markets are very narrow. There are not many opportunities for us to raise debt. Banks cannot lend to us below their MCLR rates. So, what is left is the bond market or NHB (National Housing Bank) finance.

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Also, a systemic risk will be created as most of our borrowings are at fixed rates and we are lending at floating rates. It is very good for the lending institution if rates move up because you have already borrowed at a fixed rate and the lending rate is variable. But what happens when the rates comes down, as is happening now? Every day one cannot change the borrowing basket. Going for a fixed interest rate is safer; it costs you a little bit premium but that premium is worth it.

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