Related Posts
Thehousingworld.com
Real Estate And Mortgage
Real Estate And Mortgage
Published on: May 20, 2015 @ 13:00
The move to reduce home loan rates would improve housing sales across the country, which have been suffering from general slackness in recent past. The move to reduce home loan rates is also a sigh of relief for the housing sector as well as for the customers, as it will create an opportunity for the customers to go for their dream homes.
The decision of all the top lending banks like HDFC, ICICI Bank, State Bank of India, Dewan Housing Finance and India Bulls Housing Finance to bring down the home loan rates in a single digits is a welcome step. This reduction in home loan rates could be a defining moment in the real estate’s growth come back story and expected to bring about a likely upturn in the countries investment climate and will improve the housing sales.
The housing sector will be a main beneficiary of this cut in home loan rates by several leading lending banks in April 2015. Those property developers whose dealing with the middle and lower income segments is greater, will benefit more from lower home loan rates.
Housing sector has been struggling for some time with lower demand and increasing inventories. Property purchases in India was very weak in 2014 mainly because of high interest rates and some political and policy uncertainty, due to general election, as many buyers had postponed their purchases. So many of the property developers had come up with a new easy payment scheme for certain products like 20 per cent of the property price to be paid upfront and the remainder at the end of construction, usually several years later. Around 20 per cent of the property seller’s housing sales over the last two fiscal quarters were financed by easy payment plans.
Housing sales fell to 1.75 lakh units in the primary market of seven major cities in 2014 against nearly 2 lakh units in the previous year due to slowdown in demand in the housing sales.
But, the current home loan rates cut will help revive market sentiment and would instill hope and confidence in the real estate industry and that a recovery in housing sales is around the corner. This step to reduce home loan rates will cheer up the housing market and boost housing sales.
The move to reduce home loan rates would definitely encourage buyers now to invest in new homes and given the market situation this is an important step in improving home buying sentiments. This step would help reduction in EMIs, thereby encouraging fence sitters to conclude deals and further bring prospective home buyers back to market.
This is a positive and much awaited step taken by the all top lending banks of India which would boost housing sales and improve overall sentiments in the housing market, since easing interest rate will help revive housing industry which are highly sensitive to interest rate movements.
Ajay Verma, founder and writer of TheHousingWorld, a real estate and mortgage news website. He has over fifteen years of rich experience in the above mentioned industries.
