Increment in lending rate affecting realty

Real estate developers have said increment in the lending rate by banks and financial institutions has severely affected the real estate sector.

Banks have been charging interest from 15 to 16 percent following Nepal Rastra Bank's cap on loan exposure in the real estate sector.

Bankers have been saying that said that liquidity crunch and increased interest rate have forced them to increase the interest rate.

According to Ichha Raj Tamang, president of the Nepal Land and Housing Developers Association, the arbitrary augmentation in interest rate has resulted in low sales in the realty sector.

Real estate developers are also preparing to pressurise the government to reckon the sector as a safe investment option in the absence of other better opportunities.

Tamang demanded that Nepal Rastra Bank must revise the loan exposure percentage in a practical way and the Nepal Bankers Association to reduce the interest rate.

Realty entrepreneurs are also planning to lobby with the concerned authorities to amend the act in favour of the sector. Currently, the act regarding land and housing is pending in parliament.

Of the estimated Rs. 50 billion investment portfolio of commercial banks and other financial institutions, the real estate and housing sector accounts for 20 percent. nepalnews.com