Fri. Mar 29th, 2024
picture credits-housing.com

The home buyers are elated at the prospect of lower loan rates by financers and mortgage lenders. Reportedly, state bank of India(SBI), Housing Development Finance Corporation(HDFC), ICIC and Kotak Mahindra have reduced their home loans rate significantly. ICICI bank has cut the home loan rate to 6.7%, lowest in decade.

This is projected to give the much-needed boost to the real estate sector which wasn’t accommodated by the budget significantly.

The real estate industry had earlier urged the government to reduce interest rate on home loans to 7% and to increase income-tax deduction for interest paid on housing loan to Rs 5 lakh to help revive demand after home sales grew just 1% in 2019, but the real estate sector was left in a lurch when its demands were not considered in the budget.

picture credits- freddie banks

Currently, with the low interest rates on platter, real estate developers said that the reduction in home loan rates will push housing demand further.

Pritam Chivukula, secretary of CREDAI-MICHI, an apex body of members of the real estate industry stated, “the benign interest rates environment will continue for sometime and it is unlikely that the interest rates will fall further from the current levels. For the next few days, the buyers can swoop in on good deals on the back of the rock bottom interest rates on home loans, stamp duty relaxation, offers and the availability of the choices of the good developers”.

HDFC, private lender, reportedly reduced its lending rates to 6.75% from 6.8%. Additionally, SBI is offering interest rates starting from 6.7%, on the same lines Kotak Mahindra Bank also announced 0.1% point cut in its home loan rate.

Last month, while announcing the decision of the MPC virtually, the RBI governor had stated that signs of revival were visible in India’s housing sector, with supply and demand, both showing improvement amid an improvement in consumer sentiment.

picture credits-the economics help

Kaushal Agarwal, chairman of The Guardians Real Estate Advisory had expressed his hopes for the real estate sector by commenting that  “After a budget that had limited announcements for real estate, the sector was hoping for a further reduction in the repo rates. The reduction would have helped spurred growth in demand for real estate assets that has been severely hit as a result of the pandemic and subsequent lockdowns”.

Industry experts have been emphasizing on the fact that banks need to pass on the benefits of the reduced repo rates to the customers, as the RBI had kept the repo rate low, to maintain its accommodative stance in the economy.

Jayesh Rathore, executive advisor, The Guardians Real Estate Advisory stated that “the reduction in home loan rates by lending banks is going to help the demand side immensely. Currently, the all time low, sub-7% interest rates are encouraging consumers to proceed with their purchase and quickly close their transactions. Low interest rates also help enhance eligibility of the of homebuyers, thereby bringing more customers into the market place”

By Shivani Khanna

A woman who believes in equal rights and aspires to inspire people through her writings. I aspire to contribute to the economic world and society with diligence and thus being an economic advisor tops my career ambitions . I currently am pursuing Economic honours ( at undergrad level) from delhi university.