1. Unlike USA, the service fees ( Realtor commission, mortgage broker commission, closing cost....) are NOT added to the asset value while giving loan. In India, you pay from your pocket not pad to the mortgage loan.
2. Generally people register for 70% of value of the asset to avoid paying huge (13% -18%) stamp duty at India. The banks provide 75% of the loan on registered value which works out to be 56 - 60% of the actual value. 3. All loans are offered to people who can pay the EMI (Equated Monthtly Installment)
4. Monthly payment is fixed on mortgage. As interest increase, the no of months to close the loan will increase. So, there is no change in monthly payment ever.. There are no 30 year fixed loans. Either it is Variable Quarterly or Variable once in 3 years. So banks don't loose much if the rates goes up.
The above reasons make the mortgages in India as safer for banks and affordable to people. In addition, if person can't pay he need to file bankruptcy and that is the last thing a person will do. It will drastically affect the respect of his family.
Huge lay-offs can lead to people give away their homes,but the banks will get their money back.
The spread between deposit rates and mortgage rates are more than 5% and banks make a kill on this.
Having said that, many people don't like ICICI service but they don't have many options.
I wouldn’t get too excited just yet about this government plan. This is far from a “done deal”. They’ll be plenty of opposition in the U.S. congress to a trillion dollar taxpayer bailout. And that is likely what we’re talking about here. Sure IBN is trading up. Yeh, back where it was trading a week ago. When the details of this bailout comes out it could easily fall back to where it was 2 days ago. And another thing. They’ll be consequences of a trillion dollar U.S taxpayer bailout as well. And not good one’s for the stock market. We have a long ways to go. This is far from over.