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    Realty developers expect home loan rate cuts to push housing sales in festive season

    Synopsis

    Both public as well as private sector banks including the State Bank of India (SBI), Kotak Mahindra Bank, Bank of Baroda (BoB) and Punjab National Bank (PNB) are offering home loans at a record low-interest rates to cash in the spending rush ahead of the festive season.

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    Kotak Mahindra Bank has reduced its home loan interest rates by 15 basis points (bps) to 6.50%. This special rate is a limited period festive season offer beginning 10th September and ending 8th November 2021.
    Real estate developers expect home loan rate cuts by banks and mortgage lenders to spur sales during the festive season.

    Both public and private sector banks, including the State Bank of India, Kotak Mahindra Bank, Bank of Baroda and Punjab National Bank, are offering home loans at record low interest rates to tap into the consumer demand ahead of the festive season.

    Housing Development Finance Corporation (HDFC), the country’s largest private mortgage lender, joined its peers on Tuesday by announcing an offer with home loans starting at 6.70%.

    “The festive season marks an auspicious period brimming with positive sentiments and more disposable income to splurge. This induces potential homebuyers to grab the best festive deal with the array of competitive financing options from banks by slashing interest rates and fees waiver to attract the home loan customers,” said Niranjan Hiranandani, national vice chairman, NAREDCO.

    Many homebuyers may abstain from making purchases during the ongoing Pitrupaksha period that will come to an end in the first week of October.

    However, the festive quarter of October-December usually witnesses a surge in housing sales across cities as homebuyers prefer this auspicious period, which includes Navratri, Durga Puja, Dussehra and Diwali, to book and buy properties.

    “The pandemic has accelerated the demand for home ownership as people seek secure and independent living spaces,” said Parag Munot, managing director, Kalpataru. “Softening of interest rates will further enhance home affordability, which is already at its best in over two decades. It will boost demand and play a significant role in real estate recovery which is crucial to overall economic rebound.”

    Kalpataru has projects across Mumbai, Pune, Hyderabad and Noida.

    HDFC’s offer will be applicable to all new loan applications irrespective of the loan amount or employment category. The special festive offer is for all loan slabs and for all customers with credit score of 800 and above.

    Kotak Mahindra Bank has reduced its home loan interest rates to 6.50%, which will be available for a limited period from September 10 till November 8.

    “Considering the auspicious festive season ahead, the timing of the reduction in interest rates by leading banks couldn’t have been better. The real estate market has seen decent sales this year and this reduction in interest rates would further help to keep up the sales momentum,” said Cherag Ramakrishnan, managing director, CR Realty.

    Experts said with record low interest rates, stable prices and attractive payment plans, the pent-up demand will soon translate into sales.

    Housing loan borrowers are making the most of the current record-low interest rate regime, as indicated by a 42% year-on-year surge in demand for balance transfers and 26% increase for home loans in the first half of 2021, showed a recent Magicbricks Home Loans Consumer Study.

    In terms of demand for home loans, according to this study, Hyderabad, Pune, Ahmedabad, Mumbai and Delhi were the top five tier-1 cities, while tier-2 cities such as Lucknow, Patna, Indore, Jaipur and Agra witnessed a similar increase in demand.

    The pickup in sales momentum is helping not only developers but also financial institutions and lenders overcome the challenge of liquidity.

    According to Hiranandani, financial cushioning has helped fence sitters clock the highest home deals, aiding organised developers to refinance the debts and gear up for new project launches to cater to rising demand from the first-time and upgrading homebuyers on the festive tailwinds.


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    ( Originally published on Sep 21, 2021 )
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