Festive Home Buying Bonanza

As the Covid-19 pandemic goes through a lean phase, with the vaccination drive gradually picking up pace, the festive season approaches. The positive sentiment which the festive season will bring about is expected to give a fillip to home buying.

Ensuring this happens are sentiment boosters, prominent among these is the home loan. Government policies have enhanced the advantages a home buyer gets while opting for a home loan, be it benefits under section 80C, or tax benefits on repaying the EMI, or other benefits. In the home buying process, home loan interest rates impact the overall cost of the home as also monthly out go based on the EMI payments

In the ‘new normal’ in a world where humankind co-exists with Covid-19, real estate has faced challenges – and these essentially have been add-ons to the impact caused by the tsunamis of reforms – taxation, economic and industry. Price-points stagnated, credit and funding became a challenge.  Just as green shoots of recovery emerged, along came Corona – and the Indian economy went through its worst phase.

Post the lockdown, when things opened up in June 2020, the Indian economy begin the process of restart. Home buying also restarted, albeit a bit slowly. It took a couple of months and positive moves by authorities, including Maharashtra reducing stamp duty rates, which saw the home buying process gain impetus.

In the recovery phase post the pandemic, among the positives which supported home buying has been the reduction of home loan interest rates to historical lows, which has played a major role in encouraging home seekers and investor to invest, positively impacting the sector and reviving housing demand.

With restart of economic activities, we are witnessing improved consumer spending sentiment and with the onset of the festive season, banks are competing to get home loan customers with attractive festive bonanza offers. These measures will nudge demand and make home buying possible for home seekers across segments.

As banks witness robust growth in retail home loans, it not only reflects on their balance sheet but also ensures they have lowest NPAs, thanks to the home loan segment. In turn, this will help developers push robust housing sales, with the help of deal sweeteners. This will augur well for the mid-range as also luxury housing segments this festive season.

The situation is one where competitive home finance options and benign interest rates environment will continue to positively impact home buying for some time. It will significantly improve home buying traction, providing much needed revival for the sluggish real estate sector. In past few months, sales of residential real estate have bounced back in the ‘new normal’ which has resulted in ‘work from home’ as also ‘e schooling’. Real estate has adapted to the changing needs and demographics of customers, and home loans have made many a home purchase possible.

The second wave of Covid-19 brought back a world where our lives gets confined to being within our homes. As a result, the importance and luxury of owning a house have increased manifold. And that, in turn, has drastically transformed the residential real estate market in India. Not only have sales picked up in the past few quarters after a prolonged lull, developers are also gearing up with a slew of new launches, keeping in mind the changing needs and preferences of the customer.

Among other banks, SBI, Kotak Mahindra and Bank of Baroda have offered loans at record low-interest rates. This should help these banks cash in on festive demand. The schemes on offer include lowest ever home loan interest rates as also advantages in terms of nil processing fees.

Kotak Mahindra Bank has reduced its home loan interest rates by 15 basis points (bps) from 6.65% to 6.50% p.a  .This special rate is a limited period festive season offer beginning 10th September- to 8th November 2021. Rates for both, fresh home loans and balance transfers now start at 6.50 per cent p.a., offering the best value to home buyers.

As per the revised rates from Bank of Baroda (BoB), there is a waiver of 0.25 per cent in the existing applicable rates for home loans. In addition, processing fees on home loans will be waived, and at BoB, home loan rates will start at 6.75 per cent.

State Bank of India (SBI) will charge interest rate of 6.7 per cent, based on their credit score, irrespective of the loan amount. Home loans over ₹75 lakh had to pay interest rate of 7.15, per cent, this marks a huge benefit. The concessional interest rates have been made more inclusive, and this is part of the bank’s democratic offerings across segments during the festive season, to nudge demand and push credit growth. Zero processing fees and concessional interest rates in the festive season will make homeownership with a loan from SBI more affordable.

These offers will bring festive cheer among home seekers, offering them attractive propositions to avail home loans at historic low rates. Home buyers, this festive season, will obviously be benefited by the lower interest rates and waiver of processing fees, making the period a truly festive one.

Dr. Niranjan Hiranandani is co-Founder and MD, Hiranandani Group