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Changes in the home loan market in India

The home loan market in India is expected to be highly lucrative for the fiscal year 2016-17 as interest rates are expected to further lower and banks expected to pass on the benefits to the home owners. The market is especially lucrative for first time home buyers in the affordable homes category. The government is rather keen to give the real estate/housing sector a push and have announced a slew of measures to make home loans an attractive home funding option for the year.

India’s largest bank – the State Bank of India – on cues from the central bank, recently led a round of downward revision of the interest rates. “State Bank of India has lowered its lending rate for home loans to 9.45 per cent and further to 9.4 per cent for women customers following implementation of a new interest rate calculation regime mandated by RBI,” said the bank in a recently released statement. Other banks such as ICICI, HDFC etc. followed suit, bringing plenty of summer cheer to the Indian home buyers.

The home loan market for 2016-17 has a much favorable outlook for the customer because of the governments push for ‘housing-for-all’ scheme.

In furtherance of the goal of the government of providing ‘housing for all’, it is proposed to incentivize first-home buyers availing home loans, by providing additional deduction in respect of interest on loan taken for residential house property from any financial institution up to Rs 50,000,” remarked Finance Minister Mr. Arun Jaitley.

Private housing is expected to be a considerable contributor towards this and easing home loan options will give the sector a much needed impetus. As noted in an earlier post, home owners in India can continue to avail all previous deductions even in the coming financial year with additional sops added for first time home buyers.

In addition to these measures, the home loan market is further expected to favor the consumers with increasing competition. Home loans remain one of the safer lending routes for banks with secured collaterals and assets. The growing non-performing assets issue in the country could make banks pursue a higher ratio of home loans for their lending portfolio, indirectly helping the consumers.

All in all, the 2016-17 fiscal will be a good year for home loan consumers. Favorable interest regime, liberal lending options and the passing of the Real Estate Regulation Act all favor the consumer!

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