After the government announced lower interest rates on home loans, a lot of buyers are once again hoping to buy their dream home. According to a report Finance Minister Mr. Pranab Mukherjee, 1% subsidy will be given to the people who will be buying houses for not more than Rs.20 Lakhs and this subsidy will be given for the first year on Rs.10 Lakhs only. However, this scheme may not be much beneficial to many people but still middle and lower income group can benefit from it. Still, it is not clear that this scheme will be available with lower interest rates schemes or it is applicable with other house loan packages
With schemes being provided on low priced houses, there has been an increase in the demand for such units as till now builders were focusing on luxury apartments in price range on 50 Lakhs or above. But after the slowdown,
property market has shrunk and now builders are focusing more on mid budget apartments in the range of 30-50 lakhs or lower budget apartments in the range of 15-25 lakhs.Even though it is difficult to find such low price houses in Delhi/NCR or even Tier-II cities, builders and developers are coming up with many new affordable housing projects to push property transactions.
This scheme has advantages as well as disadvantages. Let’s first look at the brighter side and assume that if interest rate is 8%, net saving during first year on 10 lakhs will be Rs. 13,403 and per month you will save up to Rs 612 leading to Rs 7,344,this means you will be saving up to 7% on EMI during first year. But on the other side, bank approved loan for 80-85% of the total property value so value of property has to be 12 lakhs and not more than that because then only it comes under 10 lakhs subsidy scheme. But if the property is more than 10-12 lakhs, say around 20-25 lakhs, subsidy will be given only on 10 lakhs and the rest of the amount, a buyer will to pay from his pocket, which can limit the buyer to purchase a house.
State Bank of India (SBI) has also further announced reduction in home loan rates under ‘My Home Campaign scheme’. The rate of interest will be 8% for the first year and during second and third year; it will become 8.5 to 9% depending upon the amount of loan. But Mr. Deepak Parekh, chairman of HDFC criticized this scheme. According to him, this artificially lowering of home loans and then raising it , may lure people in starting but can be responsible for creating subprime like condition which happened in the US markets .However, if we see current scenario, the home loans for SBI are lower than HDFC for the entire period of repayment of the loan.
According to real estate agent Mr.Kartik Bhandari, both the realty market and the job market are showing sign of recovery. Besides that, correction in home loan rates from 13% in 2008 to 8 to 9% in 2009 has stimulated the demand for
residential property.
According to a study by Religare Capital Markets, now that risk of layoffs has reduced and property prices have also come down, the demand in residential sector can increase. Also, there can be an increase in prices of about 10-15% in premium and luxury apartments or houses because after the slowdown, builders had to squeeze prices to boast sales but now with improving market condition, prices can soar.
Neha Chawla writes on behalf of
99acres.com, which is an internet portal dedicated to meet every aspect of the consumers needs in the
real estate industry. It is a forum where buyers, sellers & brokers can exchange information. At 99 acres, you can advertise a property, search for a property, browse through residential &
commercial property .
