The Drop In Home Loan Rates Boost Housing Sales In India

The Drop In Home Loan Rates Boost Housing Sales In India

The Drop In Home Loan Rates Boost Housing Sales In India

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.

 

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