Home loans: why Diwali might be the best time to buy a home

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The biggest banks and builders in India are counting on you for a revival. Low interest rate 10 year loans, deferred payments, discounts are offered. Some banks even waive fees.

A flow of money from Mint Street is helping lower rates, allowing lenders to do everything they can to court a pool of relatively secure borrowers to cushion a Covid blow to asset quality.

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State Bank of India, Kotak Mahindra Bank, Punjab National Bank and Bank of Baroda are among the banks that have cut mortgage rates from around 15 to 60 basis points to 6.5 to 6.7 percent , the lowest in a decade.

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

SBI offers 6.7% home loans regardless of the amount or profession of the borrower, which is what concessional interest rates are generally linked to. The bank also waived processing fees on home loans.

A majority of potential buyers are looking to buy a property within the next three months with self-use as the main reason, according to a recent survey by JLL-RoofandFloor. Experts believe that under these circumstances, with house prices stable, reduced loan rates will boost residential sales.

India’s largest private bank, HDFC Bank, is partnering with fintech companies to accelerate the reach of its credit cards during that three-month period.

The rate cuts are bolstered by Finance Minister Nirmala Sitharaman’s recent directive to state banks to speed up lending and set up credit programs across India from October. “We’re likely to see a significant improvement in traction in the housing segment during this time,” Anuj Puri, chairman of Anarock Group, told ET.

The latest research shows that the highest demand is currently in the high end segment, where properties are priced at Rs 80 lakh and above, he added.

“The sustained recovery and resilience demonstrated during the second wave of Covid-19 is indicative of a fundamental shift in the feeling of homeownership,” said Sriram Krishnaswamy, COO, RoofandFloor.

With the return of awareness programs, the flow of credit to productive sectors is likely to increase. Some experts believe developers could post a record number of sales bookings in the second half of fiscal 22.


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