RBI working on improving on housing finance database

MUMBAI: The Reserve Bank is working on further broad basing its home price data base so that it can monitor among others loan to value ratio , EMI or equated monthly instalments to income ratio, a top RBI official said. These are the parameters which are crucial to assess individual affordability of home loan and its repayments.

" The Reserve Bank is also developing a housing asset price monitoring system covering such details as LTV ratio, EMI to income ratio and price to income ratio based on housing loan data from select cities collected from select banks and HFCs." Said Deepak Mohanty, executive director, RBI at an international seminar orgainsed by the National Housing Bank last week.

Currently there are two house price indices or HPIs available in the public domain. One is the National Housing Bank's NHB-Residex compiled on survey based information for 20 cities. The second one is RBI-HPI based on registration prices information for 9 cities.

RBI's work of compilation of a HPI was initiated by the central bank in 2007, said Mohanty. It began with Mumbai city. Subsequently, the coverage has been extended to eight more cities: Delhi, Chennai, Kolkata, Bengaluru, Lucknow, Ahmadabad, Jaipur and Kanpur. Apart from data for individual cities, a composite HPI covering these 9 cities is currently being is released by the central bank on a quarterly basis. As per the Reserve Bank's composite HPI, house prices have nearly doubled since 2008-09.

Among other issues that Mr Mohanty highlighted, he also said that in order to mitigate risks in housing finance, besides application of macro-prudential regulations, there is a need to develop a fixed rate housing loan product of longer maturity.

Besides, borrowing from banks and housing finance companies, self financing from private sources, withdrawals from provident funds and loans from employers are important sources of housing finance.