Lower home loan rates set to push up realty sales

Hyderabad: In the wake of festive season, major banks and financial institutions in the country have slashed their interest rates on home loans to infuse a positive sentiment in the residential sector. Industry insiders say this will not only improve the housing demand but also reduce the EMI burden on the home buyers, which will further increase savings of the households.

As part of the festive season promotions, most of the banks and financial institutions are offering home loans at interest rates starting from 6.5 per cent a year.

Real estate experts anticipate demand pick up across all categories, and particularly in the affordable housing segment due to the enhanced loan eligibility and availability of more quantum of credit.

"The slashed interest rates on home loans will definitely give impetus to mass sale of affordable houses. Those, who had been not eligible for higher loan amount so far, will get the credit facility and buy their dream home now," says C Shekar Reddy, former National President, Credai and Chairman of CII Indian Green Building Council, Hyderabad.

He adds, "In other countries, banks are offering home loans at interest rates as low as 2 per cent also. Such a situation has to come here to achieve Prime Minister Narendra Modi's vision to provide houses to all by 2022. However, it still remains a challenging target owing to the growing population in the country."

The cost of construction is increasing day-by-day due to rise in land rates, material cost and wages to the labour. As the builders and developers may not deliver houses at affordable prices for long time, the bigwigs of realty industry feel that the banks need to provide home loans at marginal interest rates to fuel the demand in housing sector.

Anshuman Magazine, Chairman and CEO, India, South-East Asia, Middle East & Africa, CBRE, said: "India's residential sales have flourished significantly despite the pandemic. With homeownership becoming a priority and the government's active mass vaccination initiatives, we can expect further growth in the residential sector, especially during the upcoming festive season".

He adds, "Historically, the festive season has been an auspicious time for home purchase, aided by attractive schemes of the developers. With banks like HDFC, PNB, Kotak and SBI offering further reduced interest rates, the residential sector is expected to witness an uptick - along with infusing a lucrative demand for housing properties in the forthcoming festive season."