Home Loans: Why Diwali might be the best time to buy a house

Home Loans: Why Diwali might be the best time to buy a house

The biggest banks in India, along with builders, are pushing home loans with decade-low interest rates ahead of the festive season amid hopes of consumer demand returning to pre-Covid levels.

While all of India Inc readies itself with price discounts and offers to bolster sales ahead of the Diwali rush, builders are offering discounts and gifts to home buyers, deferring payment plans, and also foregoing charges to tap into the revival in the property market.

The Reserve Bank’s massive liquidity injections are helping the fall in rates, letting lenders capture relatively safe sets of borrowers as the pandemic continues to threaten asset quality.

A majority of prospective homebuyers are looking to purchase a property in the next three months with self-use as a primary reason, a recent JLL-RoofandFloor survey shows. Experts believe that under that circumstance with stable home prices, the reduced loan rates will bolster residential sales.

State Bank of India, Kotak Mahindra Bank, Punjab National Bank, Bank of Baroda are the notable names taking part in this exercise by slashing home loan rates by around 15-60 basis points to 6.5-6.7% – the lowest in a decade.

Kotak Bank has reduced rates to 6.5% – the lowest in the industry – on all loan amounts, fresh loans, and balance transfer cases from September 10 to November 8, as the bank looks to expand market share and increase the book size.

SBI is offering home loans at 6.7% irrespective of amount or the profession of the borrower, which is what concessional interest rates are usually tied to. The bank has also waived processing fees on home loans.

Meanwhile, India’s largest private bank HDFC Bank is partnering with fintech companies to accelerate its credit card reach during this three-month period.

The rate cuts are reinforced by Finance Minister Nirmala Sitharaman’s recent directive to state-run banks to accelerate lending and hold credit outreach programmes across India from October.

“We are likely to see significantly improved traction in the housing segment during this period,” Anuj Puri, chairman, Anarock Group told ET.

Latest research shows that the highest demand is currently in the premium segment, where properties are priced Rs 80 lakh and above, he added.

“Sustained recovery and the resilience shown during the second Covid-19 wave are indicative of a fundamental shift in the sentiment towards home ownership,” said Sriram Krishnaswamy, COO, RoofandFloor.

With outreach programmes returning, credit flow to productive sectors is likely to swell. Some experts believe that developers may post record sales booking numbers in the second half of FY22.

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