Banks and financial institutions (BFIs) invested Rs 32.74 billion in personal home loans in the first half of the current fiscal year, along with an increase in demand for housing loans.
According to Nepal Rastra Bank (NRB), the BFIs have invested Rs 380 billion in home loans as of mid-January of the current fiscal year. In the first six months, the BFIs’ investment in personal home loans increased by 9.40 percent from Rs 348 billion in mid-July.
The business of the real estate sector had slumped in the past few years with the NRB tightening the gauge in the segment. After the NRB introduced flexible measures through the monetary policy for 2023/24 last year, the demand for home loans started to increase. Through its policy, the NRB extended the limit of home loans from Rs 15 million to Rs 20 million.
The central bank had revised the ratio of monthly installment on home loans payment to income to 60 percent from 50 percent for home loans of up to Rs 5 million. In addition, through the first quarterly review of its monetary policy in December 2023, the NRB reduced the risk weightage of mortgage loans within the threshold of 125 percent from 150 percent.
The NRB records, however, show that the overall real estate loans declined 1.8 percent in the review period. The BFIs disbursed loans worth Rs 245 billion as of mid-January, down from Rs 249 billion in mid July.
