The country’s largest private mortgage lender HDFC has reduced the interest rate on its home loans to 6.75% from 6.8%. This reduction in home loan rate was announced just days after banks like the State Bank of India (SBI) and Kotak Mahindra Bank announced rate cuts.
Realty developers believe the reduction in home loan rates is expected to push housing demand further.
“The benign interest rates environment will continue for some time and it is unlikely that 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 rock-bottom interest rates on home loans, stamp duty relaxation, offers and the availability of choices from good developers. We can already see that the demand for residential properties has picked up now as people are beginning to believe that this is the best time to buy a property,” said Pritam Chivukula, Secretary, CREDAI-MCHI and Co-Founder, Tridhaatu Realty.
The banks are competing to grab the home loan customers before the fiscal year ends and the reduction in home loan interest rates have extended the best buying opportunity for the homebuyers.
“There is already a growing desire of owning a home as consumers look at it as a necessity in this unprecedented time of the COVID-19 pandemic. With the last few days left to avail the stamp duty benefit, there is a stiff competition amongst the financial institutions to provide the consumers with the best home loan interest rates…These factors are also proving to help spur the real estate demand that was temporarily hit as a result of the pandemic,” said Ashok Mohanani – President, NAREDCO Maharashtra.
Realty industry experts have been voicing their demand that banks need to pass on the benefits of the reduced repo rates to consumers. The real estate sector has benefited immensely from the record low home loan rates, apart from the temporary reduction in stamp duty charges in key states.
“The reduction in home loan rates by leading 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 for home buyers thereby bringing more customers into the marketplace,” said Jayesh Rathod, Executive Director, The Guardians Real Estate Advisory.
According to Rathod, a low interest rate regime is bound to catapult economic growth in the country as a result of enhanced consumption. The low interest rates coupled with negligible or nil transaction cost will augur well for ready-to-move-in homes and the affordable housing industry.
In the last few days, SBI has offered an interest concession of up to 70 bps with interest rates starting from 6.7% onwards for a limited period offer till March end. Kotak Mahindra Bank also on Monday announced a 0.10 percentage point cut in its home loan rates for a limited period. Customers will be able to avail home loans for 6.65% till March 31 as part of a special offer after the rate reduction.