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  • Re : Home Loans & Related News

    The dilemma in home loans: fixed or floating interest rate?

    Joydeep Sen

    3d Businessman Run Ahead Of The Team Over Red Arrow. He Chose Right Path. Conceptual Isometric Better Choice Vector Illustration. In home loans, the nagging question remains: should the borrower choose fixed rates of interest or opt for floating rates?

    The decision to choose between a floating rate and fixed rate home loan has always been an important one for borrowers. This topic has been discussed widely and if you do a Google search, you will get some inputs on this. Having said that, it needs a proper perspective. First, let’s get the basics clear.

    Floating rate means that the interest rate you are paying now is a function of the rate environment today. Subsequently, as interest rates in the economy move up or down, the rate you pay will move up or down accordingly.

    Hence the name ‘floating’ i.e. it floats with some reference benchmark. A fixed rate home loan is a tricky term. While from the name it seems that the interest rate is fixed, there may be a clause in fine print that the loan provider may raise the rate at some point, triggered by some development.

    This may be referred to as the so-called fixed or floating-fixed rate home loan, where the interest rate is not as fluctuating as floating, but may fluctuate under certain conditions. Then there is the fixed rate loan, which may be referred to as proper fixed or fixed-fixed rate loan, provided you go through the document or consult a legal professional.

    From the loan provider’s point of view, who would be a bank or an NBFC, they would be more comfortable in offering a lower rate of interest in a floating rate loan, than fixed, because when interest rates move up, which will happen because the economy goes through cycles, they can increase your rate.

    In a fixed rate loan, in particular a fixed-fixed rate loan, the provider is stuck with the contracted rate of interest. Hence, in a fixed rate loan, from their own margin perspective, they would rather fix the rate on the higher side. Borrower’s perspective

    Now the big question is, from your (i.e. borrower’s) perspective, which one should you choose? If your loan is for a short tenure, say five years, floating rate is preferable as you are availing of a lower rate to start with.

    Bear in mind, interest rates may move up. Even then, since the tenure is not too long, and given that economic cycles take time to play out, it is expected that for a better part of your loan tenure, you would be paying a rate lower than the fixed one. Currently, banks are offering floating rate loans only and not showcasing fixed rate EMIs as the differential is significant.

    That is, fixed rate loans are at a much higher rate than floating rate loans and it does not make sense to offer it to customers. NBFCs on the other hand, are offering both, fixed and floating. This helps you evaluate where you would break even if interest rates were to move up.

    The flip side is, if the fixed-rate loan is so-called-fixed and not real fixed, you may be under the impression that you are buying peace of mind, by assuming EMIs would not move up, But you never know.

    Now, if your loan is for a long tenure and you start with floating rate, the interest rate cycle may reverse and you may end up paying as much as for a fixed rate loan. If that happens, you may shift to a fixed rate loan so that you know for certain what you will end up paying. Although, there would be charges/fees applicable for the switch. But if the loan amount is not too small, it is worth it. Nowadays, information is easy to access online; when the rate cycle reverses after, say, a year or two, you can track fixed rates across providers and optimise by shifting. Current situation

    A change in rules for floating rate loans were made about a year ago. The RBI circular of September 2019 stated that all new floating rate loans offered by banks from October 2019 onwards should be marked to an external benchmark.

    A pet peeve of banking loan customers, and rightfully so, used to be that banks are quick to raise loan rates when interest rates move up, but slow to reduce when rates ease. The options for a bank in using external benchmarks are the RBI repo rate or the 3-month/6-month treasury bill yield. It was also stated that the interest rate under external benchmark shall be reset at least once in three months. An external benchmark is one the fixing of which is not decided or influenced by the bank.

    For example, repo rate i.e. the rate at which RBI lends to banks for one day, is decided by the RBI, hence external. With external benchmarking, transmission of rates will be faster on both sides i.e. up and down.

    The spread maintained by banks is currently on the higher side; with the repo rate at 4% and the lowest rate being at 6.75% and most of the rates being upwards of 7%. The RBI circular stated that while banks are free to decide the spread over the external benchmark, ‘credit risk premium may undergo change only when borrower’s credit assessment undergoes a substantial change, as agreed upon in the loan contract.’ Banks are protecting their margin. If interest rates were to move up in future, at the same spread, the rate would be that much higher.

    Interest rate cycles will move over a long tenure, and nobody can time them.

    Rather, when rates actually move, you can compare the options between fixed and floating, subject to charges. As of now, a floating option is better as the rates are lower with one bank offering 6.75%. You are starting off with an advantage of a low rate and you are aware it may move up, instead of being under the illusion of a so-called fixed rate loan.

    The dilemma in home loans: fixed or floating interest rate? - The Hindu

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    • Re : Home Loans & Related News

      Why lenders no longer offer fixed rate home loan

      While home loan rates in India are close to two-decade low, financial institutions expect rates to have bottomed out

      Manojit Saha,

      Representative Image. Credit: iStock Photo

      With interest rates lowest in 20 years, one would think opting for a fixed rate home loan will be beneficial. The only issue is that almost no banks or housing finance companies offer fixed home loan rate products anymore.

      At present, home loan rates start from 6.7 per cent for most of the lenders. While home loan rates in India are close to two-decade low, financial institutions expect rates to have bottomed out. Going forward, rates are likely to go up if bond yields are any indication. A fixed loan rate of around 8-8.5 per cent would have been highly beneficial for a customer whose repayment schedule is 15-20 years. Home loan rates in India have hit a peak rate of over 11 per cent when the interest rate cycle was moving up.

      Home loan rate of State Bank of India (SBI) – the country’s largest lender – starts at 6.7 per cent for loan value up to Rs 75 lakh. This is the rate which will be offered to best customers according to the credit bureau score.

      Similarly, ICICI Bank also charges 6.7 per cent for loans up to Rs 75 lakh. Housing Development Finance Corporation (HDFC) charges 6.7 per cent for all loans irrespective of the loan amount. These rates are applicable till March 31 as they are part of a special discount scheme.

      None of these lenders offer fixed rate loan products. HDFC offers a fixed-cum-floating rate product where the interest rate is fixed for the initial two years.

      So why are banks and mortgage financiers not offering pure fixed rate loans.

      “They know that rates will not remain at this level. Rates will go up,” said CVR Rajendran, MD & CEO, CSB Bank.

      “If they offer a fixed rate loan they will have a loss making situation, going forward. The floating loan rates are linked to repo rate or any other rate. When RBI hikes the rate, home loan rates will go up,” Rajendran told DH.

      The Reserve Bank of India, has reduced the key policy rate or the repo rate by 250 bps since February 2019, which is at 4 per cent. While the central bank has assured the market with the accommodative stance of the monetary policy as long as necessary to revive growth, bond yields have started to harden with the yield on 10 year benchmark government bonds rising around 30 bps since the beginning of February.

      Bankers said the linking of floating rate retail loans to an external benchmark, which was mandated by RBI from October 2019 is another reason why most banks have stopped offering fixed rate home loans.

      Most banks have linked their home loan rates to the RBI’s repo rate.

      Apart from the expectation of rising interest rates, asset liability is another issue that holds back banks from offering fixed rate loans.

      “Typical tenure of bank deposit is anywhere from 1 to 3 years, at most 5 years. So there is an issue of asset liability mismatch. Which is why offering a fixed rate loan is not good economics from an ALM standpoint,” Gaurav Gupta, founder and CEO of MyLoanCare.

      In addition, there has been lower customer preference for fixed rate home loan products as lenders can charge prepayment penalty for such products.

      According to RBI norms, lenders cannot charge such penalty for floating rate retail products.

      “From a regulatory standpoint, there are repayment charges that are applicable for fixed rate products. There is very little customer preference for a fixed rate home loan for a very long time,” Gupta said.

      “From lenders’ perspective, interest rates are 18-19 years low, and home loan rates are a long tenure product. So if a bank offers a fixed rate home loan product, it will end up priced significantly higher than a floating rate loan. If floating rate loans are priced at 6.7 per cent, then chances are if someone is to have a fixed loan rate, it would be higher by 150-200 bps. Then the question is why would the customer go for it,” Gupta added.

      Home loan growth slowed down significantly in the last one year due to fall in income levels caused by the pandemic-induced lockdown.

      According to the RBI data, year-on-year loan growth of commercial banks stood at 7.7 per cent till the end of January as compared to 17.5 per cent a year ago. Loan growth in the financial year so far (till January) was 5.9 per cent as compared to 13.5 per cent a year ago.

      Why lenders no longer offer fixed rate home loan | Deccan Herald
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      • Re : Home Loans & Related News

        Home loan rate cut: Home, consumer loans from NBFCs to become cheaper

        Synopsis The average base rate of 5 largest commercial banks in India has fallen by 0.15% from 7.96% to 7.81% for the quarter ending March 31, 2021.

        Getty Images

        New borrowers of NBFCs and MFIs will have to pay lower interest from the first quarter of the new financial year 2021-22. Apart from new borrowers this interest rate reduction will also benefit individuals who have taken floating rate loans such as home loan from these lenders.

        RBI has released the latest average base rate which works as a benchmark interest rate for Non Banking Financial Companies (NBFCs) and Micro Finance Institutions (MFIs). This rate is the average base rate of 5 largest commercial banks in India which has fallen by 0.15% from 7.96% to 7.81% for the quarter ending March 31, 2021. There has been an overall reduction of 1.4% within last 2 years as this rate was 9.21% for the quarter ending June 30, 2019.

        At the end of each quarter, the RBI releases this data which works as a benchmark for the NBFCs and MFIs to arrive at the interest rate they charge from the borrowers in the following quarter.

        Individuals who are planning to take loans from NBFCS or MFIs will get the advantage of the reduced rate of interest on all types of loans. As far as existing borrowers are concerned, only those who have taken loans on floating rate basis will get the advantage of this reduction.

        The interest rates charged by many NBFCs and MFIs on loans have traditionally been on the higher side. RBI took the decision to regulate the interest rate pricing by NBFC and MFI by providing a benchmark in the form of average base rate of the 5 largest commercial banks.

        Till March 31, 2013, all such lenders were allowed to keep a margin of 12% above their cost of funds when charging interest rates while extending loans to their borrowers. While small lenders can still charge 12% margin above their cost of funds however the bigger lenders, who have loan portfolio exceeding Rs 100 crores, cannot keep this lending margin above 10% from April 1, 2014.

        However, in addition to the above there is a cap on the interest rate that can be charged from borrowers. The maximum interest rate cannot go beyond 2.75 times of the average base rate of the 5 largest commercial banks. Therefore, this average rate is the final limit up to which interest rate can be charged.

        As the current average base rate released by RBI is 7.81% therefore the maximum rate charged by these lenders can not go above 21.48%. This is a huge relief for the borrowers who have often been paying one of the highest interest rates being charged on consumer loans.

        Home loan rate cut: Home, consumer loans from NBFCs to become cheaper - The Economic Times (
        Last edited April 4 2021, 07:23 AM.
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        • Re : Home Loans & Related News

          Missed home loan EMI? Know the consequences

          To avoid home loan default, you can request a lower EMI with your lender and finance it more efficiently. (iStock)

          2 min read . Updated: 14 Apr 2021, 09:13 PM IST Navneet Dubey

          A single default can bring down your credit score by 50-70 points. It could make you ineligible for further credit

          MUMBAI : People usually take a home loan to finance their dream purchase. As home loans are taken for the long term, there may come a time when you may not be able to pay one of your equated monthly instalments (EMIs) because of unforeseen circumstances.

          If you miss an EMI payment, you may have to face some consequences in the following month while paying the missed portion along with the EMI of the next month.

          The consequences will be two-fold: financial as well as reputational.

          “From a financial perspective, you will be charged late fees, penalties and even a penal interest in some cases. The penalty charge is usually around 1-2% of the EMI. However, depending on the situation, in some cases, you may have to pay penal interest on the entire overdue amount for the period of default instead. This would be in addition to the late fees charged by the lender. In all, it could be a significant amount," said Adhil Shetty, chief executive officer,

          The reputational damage can be even worse. Missing even a single EMI payment gets recorded in your credit history and harms your credit score. A single default on your home loan can bring down your score by 50-70 points. Such a situation may make you ineligible for further credit.

          However, if you have missed an EMI and it is within 90 days of the last payment, it will be classified as a minor default, and you can recover from its impact if you take prompt corrective action. Pay off the missed EMI on the next due date and ensure that you do not miss any further EMIs.

          “In case you have genuine financial difficulties brought on by a job loss or medical conditions, reach out to the lender and find a solution," said Shetty. “You have 90 days to pay your dues before your loan gets classified as a non-performing asset (NPA). Work with the lender to find a solution before that. Remember, if you are still unable to repay your dues after 90 days, the lender reserves the right to initiate the process of auctioning off your property to recover its dues as allowed by the legal framework of the SARFAESI Act, 2002. So, take steps early on to avoid such situations."

          Hence, to avoid a home loan default, you can request a lower EMI with your lender and finance it more efficiently. In cases where there is a break in the flow of income, you can approach the lender and request for an EMI-free period. Banks may give you a three- to six-month waiver on EMI payments in case you have lost your job or temporarily stopped your business operations, etc. However, the lender can charge interest on the outstanding loan amount for this period later on.

          Another option is to make partial payments to lower the EMI burden. This can be done using a home loan overdraft facility. Thus, whenever you have surplus funds available and an active home loan, making a part payment to the overdraft account can ease your financial burden.

          Missed home loan EMI? Know the consequences (
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          • Re : Home Loans & Related News

            Home Loan Balance Transfer: Know the Process and Its Benefits

            While a balance transfer helps you reduce home loan EMI payments, the move may not always be profitable.

            April 30, 2021 / 09:35 AM IST

            A home loan is a big-ticket and long-term financial tool that offers ample funding and is normally repaid over a decade or two. Given that repayment stretches for so long, it can be tough on your finances if you are stuck with an expensive loan deal. For instance, your housing loan interest rate may be well over the current rates being offered. If you find yourself with a less-than-ideal home loan and know of better alternatives, know that you can carry out a home loan balance transfer and refinance your loan on more cost-effective terms.

            Here is a rundown on the benefits and the process of conducting a home loan balance transfer.

            Pay lower interest with a reduced interest rate

            Your main reason to switch lenders should be to clear your debt more affordably and quickly. When you find a lender offering a significantly lower interest rate than your current rate on home loan, you can weigh the pros and cons of a balance transfer.

            While a balance transfer helps you reduce home loan EMI payments, the move may not always be profitable. When you carry out a balance transfer, you repay your outstanding balance at a new, lower rate. Now, for this to be effective, the new housing loan interest rate should be significantly lower, the unpaid amount should be sizable, and the remaining tenor should allow for sufficient interest savings. Else, the amount you spend on balance transfer costs may outweigh your benefits.

            All said and done, if the math is in your favour, a home loan balance transfer can help you notably reduce your debt payments. Ideally, switch lenders in the early phases of repayment. Here, even a small change in the housing loan interest rate makes a big impact.

            Refinance your loan over a convenient tenor

            During a balance transfer, it is likely that you will get a reduced housing loan interest rate. This means that your EMI reduces, your tenor reduces, or both. You can discuss this with your new lender and if you are looking to get debt-free faster, consider a tenor reduction.

            However, if you are servicing a lot of fixed obligations, you may want, along with a lower interest rate, an extended tenor. This allows you to keep your EMI small. You can view the relationship between your tenor and EMI on an EMI calculator for home loan repayment.

            Get access to a top-up loan

            Lenders extend an additional amount over and above your existing principal as a top-up loan and you can avail of this facility when carrying out a home loan balance transfer. The advantage is that top-up loan funds can be used for any purpose, not just housing-related expenses. Further, the interest rate applicable will be marginally higher than your housing loan interest rate. Hence, taking a top-up loan when conducting a balance transfer can be much more economical than taking a fresh personal loan.

            Benefit from better home loan terms and services

            Also, you may benefit from prompter customer service, a seamless digital portal for loan management, customised schemes, and more. While these factors may not influence your decision as much as the interest rate, they are important, nonetheless.

            Steps to switch your home loan to a new lender

            You will first need to meet the eligibility criteria, which normally require you to have paid a certain amount of EMIs, have no outstanding dues and possess a property that is or can be occupied. Then do a cost-benefit analysis. Once satisfied, you can:

            ● Apply for a balance transfer with your new lender and get approval
            ● Write to your current lender and obtain a NOC
            ● Submit to your new lender documents such as KYC, bank statements, outstanding balance, and the list of property documents from existing lender
            ● Wait for your new lender to clear the outstanding balance and finish foreclosure formalities

            ● Submit property documents to your new lender and take balance loan amount

            When you refinance your loan with Bajaj Housing Finance Limited, you are assured of a quick and hassle-free home loan balance transfer process. You get an attractive rate of interest and access to a substantial top-up loan along with a flexible repayment tenor. You can apply online to get started with a balance transfer today!

            Home Loan Balance Transfer: Know The Process And Its Benefits (

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            • Re : Home Loans & Related News

              Has the second covid wave turned things in favour of homebuyers?

              Premium Photo Mint 4 min read . Updated: 28 Jun 2021, 05:21 AM IST Renu Yadav

              For people planning to buy a house now, low interest rates on loans, subdued prices and incentives are positives Read Full Story
              After record sales in the January to March quarter of calendar year 2021 (CY21), sales in the real estate sector saw a drastic reduction as lockdowns were imposed across the country to weaken the second wave of covid-19. According to projected data from Anarock Property Consultants, sales in the second quarter of CY21 (Q2CY21) could slip 58% below the previous quarter as only 24,570 units may be sold, compared with 58,290 in Q1CY21. However, homebuyers are making a slow comeback to the market. Property consultants and developers we spoke with said footfall has risen to about 40-50% of what it was prior to the second wave, as lockdowns are getting lifted.

              Despite the change in circumstances, if you are still not sure if now is the right time to buy a house or not, let us look at the factors that affect a home-buying decision, and how they have changed after the second wave.
              View Full Image Graphic by Paras Jain/Mint

              Low interest rates: Interest rates on home loans are at more than a decade low, which has improved affordability for homebuyers. As the cost of borrowing is low, equated monthly instalments (EMIs) for loans of the same tenures and amounts will be lower . Of late, we have seen an uptick in inflation, which has raised fears that interest rates may go up. But experts say it is unlikely that interest rates will go up in the near future.

              “The Reserve Bank of India (RBI) has made it clear that it will be focusing more on supporting growth, despite the fact that inflation is expected to remain on the higher side at about 5% throughout the year. The RBI is pushing liquidity in the market through its bond purchase programme to keep bond yields from rising. If yields don’t go up, interest rates are unlikely to go up," said Madan Sabnavis, chief economist, Care Ratings.

              “Also, banks are unlikely to increase deposit rates, which would lead to increase in interest rates of loans, as there has been a lower than usual demand for credit from corporates. Banks will also push retail loans as the chances of them becoming non-performing assets (NPAs) are less. All these factors indicate that we are unlikely to see a rate hike in this calendar year," he added.

              Construction delays: During the lockdown imposed last year, construction activity was halted almost completely; this time as the lockdown was not as stringent, some activity continued even during the lockdown. But there will still be delays. “Many developers would face delays due to labour shortage; some construction workers left the town for the harvest season before the lockdown was implemented," said Manoj Gaur, chairman and managing director, Gaurs group and vice president, North, Credai National. It was a temporary setback, though, as labourers are now returning to workplaces.

              “The situation will improve next month onwards, especially for developers where contractors’ payments are streamlined," said Amarjeet Bakshi, chairman and managing director, Central Park. However, the fear of a third wave can’t be ignored, it may impact construction activity going forward as well. So, if you plan to buy a house, it will be prudent for you to go for a ready-to-move-in house rather than an under-construction property to avoid the execution risk. Offers and discounts: To boost sales in the real estate sector, a few states, including Maharashtra, slashed stamp duties for a limited period. This resulted in record sales in Q1CY21. However, the Maharashtra government has not extended the stamp duty cut. The deadline for credit-linked subsidy scheme (CLSS) under the Pradhan Mantri Awas Yojana (PMAY) for mid-income groups 1 and 2 also expired on 31 March. Although some of these incentives no longer exist, experts say developers are offering adequate incentives to homebuyers.

              “There are offers such as easy payment plans, paying rent till possession, etc. Additionally, when a buyer sits across the table, the developer usually adds a discount to seal the deal," said Mani Rangarajan, group chief operating officer (COO),, *********** and **************.

              “Property prices are at their lowest point and developers are still offering various incentives and discounts to serious buyers. In short, there are still sufficient incentives for buying homes, though sales velocity was certainly much faster during the stamp duty cut period," said Anuj Puri, chairman, Anarock Property Consultants.

              Price movement: High inventory and poor sales have ensured that housing prices remain subdued for quite some time. The housing price index released by RBI showed an increase of 1.1% in the third quarter of financial year 2020-21. However, the construction cost has gone up around 10%, according to industry estimates. This has mounted pressure on developers who are already operating with thin margins. “Property prices may increase in the range of 5-8% by the end of 2021 as input costs have increased significantly, and industry leaders are echoing this sentiment too. The coming months might see a price bump, but the percentage of price rise may vary according to markets," said Kanika Gupta Shori, COO and co-founder, SquareYards. However, the price rise may not be uniform, and across all sections, say experts.

              Mint takeaway: If you are planning to buy a house to live in, and are confident about the continuity of your job and business, now is a good time. If you are availing a loan, be doubly sure about your financial ability. Also, if your pocket allows, it will be better to go for a ready-to-move-in property to avoid construction delays, and as there is no goods and services tax in case of ready-to-move-in properties.

              Has the second covid wave turned things in favour of homebuyers? (

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              • Re : Home Loans & Related News

                Home loan disbursals down 23% in Gujarat

                Bankers attribute the decline primarily to falling incomes due to which the uptake of new home loans has gone down. With the pandemic-induced lockdown, not only did demand for new properties take a hit but also launches of new schemes.
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                  On 75th Independence Day, SBI gives offer on home loan; here's how to apply

                  SBI home loan offers on India's 75th Independence Day (REUTERS) 1 min read . Updated: 14 Aug 2021, 09:56 AM IST Livemint

                  SBI home loan: As part of Azadi Ka Amrit Mahotsav campaign, on 15th August, one can avail of this attractive home loan facility of SBI

                  On the ocassion of India's Independence Day, the State Bank of India (SBI) is offering zero processing fees on home loans to help its customers achieve freedom from rent. SBI gave this information in a tweet in which it wrote, "This Independence Day, step into your dream home, with ZERO* processing fee on Home Loans. Apply Now".

                  Besides, women are being given the benefit of the very attractive discount facility on home loans by the country's largest lender.

                  Under the home loan facility, women are being given the benefit of 5% BPS interest concession.

                  Apart from this, if you want to take a home loan under SBI's YONO service, you will still get the benefit of 5% BPS interest concession. One has to pay interest at the rate of 6.70% on the SBI home loans.

                  How to apply?

                  As part of Azadi Ka Amrit Mahotsav campaign, on 15th August, one can avail of this attractive home loan facility of SBI.

                  On 75th Independence Day, SBI gives offer on home loan; here's how to apply (
                  Last edited August 14 2021, 03:36 PM.
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                  • Re : Home Loans & Related News

                    As home loan rates dip, real estate players see promise

                    Shiladitya Pandit / TNN / Sep 27, 2021, 04:13 IST

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                    • Re : Home Loans & Related News

                      Improved affordability, lowest-ever interest rate pushing home loan demand

                      Favourable demographics, improved affordability of residential properties and historically low mortgage rates are pushing the demand for home loans, mortgage lenders said.

                      Topics Residential property market | Home Loan | mortgage

                      Press Trust of India | New Delhi Last Updated at October 17, 2021 15:52 IST

                      Favourable demographics, improved affordability of residential properties and historically low mortgage rates are pushing the demand for home loans, mortgage lenders said.

                      Several major banks, mortgage companies and housing finance companies have significantly reduced their interest rates on home loans during the festival period to encash revival in housing demand after the second wave of the COVID-19 pandemic.

                      In some cases, the interest rate on home loans is as low as 6.5 per cent.

                      Asked about the likely impact of its decision to cut mortgage rates for the festive season on home loan disbursals, HDFC Managing Director Renu Sud Karnad said the lower interest rate does help but it is just one of the many variables for the pick-up in demand for home loans.

                      "Housing today is much more affordable than it ever was. In the last couple of years, property prices have more or less remained the same across the country while income levels have gone up," she noted.

                      Karnad further said people are upgrading to bigger size apartments because of the requirements of additional space post-outbreak of the COVID-19 pandemic.

                      "Work from home, education from home and entertainment from home due to the pandemic have also made people realise the need for an additional space at home," she said.

                      Y Viswanatha Gowd, managing director and CEO of LIC Housing Finance, said the company is positive because there is demand for ready-made houses.

                      "Already pent-up demand is there and even the job market is experiencing an upswing. Even the sentiments of our customers are on the rise because markets are getting opened up. Vaccination comfort has given more confidence to people to move around and physically go and see properties and choose," Gowd said.

                      Gowd expects housing demand to remain strong during this festival season and beyond, especially in the readymade home segment and in the affordable home segment.

                      Property consultant Colliers India new CEO Ramesh Nair said several banks in India have cut home loan rates ahead of the festive season to encourage homebuyers.

                      "This will spur demand for homes across the spectrum -- in the affordable, mid and premium segments. Already the stage is set for a revival in housing demand. This was enabled by stable housing prices, rising salaries in technology sectors, and the greater need to own homes," he said.

                      Nair opined that the recent rate cuts by banks is a positive initiative for homebuyers, and will nudge homebuying sitting on the fence.

                      According to Nair, as of August 2021, the disbursement of housing loans grew 9.2 per cent from the year-ago period.

                      "This is a good sign, and home loan disbursements will further rise in the upcoming months," Nair added.

                      Karnad further highlighted that demand for housing and home loans has improved because of various positive factors.

                      "So a combination of factors viz., favourable demographics, improved affordability, lowest ever interest rates on home loans in India are pushing the demand for home loans," said HDFC MD.

                      Karnad said the sentiments in the real estate market and housing finance have improved on the back of a strong recovery in economic growth and lower job losses than anticipated.

                      "...much lower job losses against what was feared during the pandemic followed by good recovery in economic growth and sentiments have resulted in improved confidence which is very vital for one to take biggest investment decision in life i.e. buying a house," she observed.

                      On festive season housing sales and home loan disbursals, Karnad said the festive season is considered as an auspicious time for buying a new house and it boosts the real estate market in India.

                      "Having said that, we have seen healthy growth for home loans not just during the festive season but also during the normal course of year...," she said.

                      V Swaminathan, CEO of Andromeda and Apnapaisa, said banks are looking to capitalise on this festive season by offering home loans at a record low interest rate.

                      Swaminathan said the housing loan market in the country witnessed a rebound and registered a year-on-year growth of 9.6 per cent in terms of portfolio outstanding (PoS) in the third quarter of 2020-21.

                      Meanwhile, as a part of the festive offer, Bank of India on Sunday announced a 35 basis point reduction in its home loan interest rates and a 50 basis points reduction in vehicle loan interest rates with the minimum rate now starting at 6.50 per cent against 6.85 per cent on home loans and 6.85 per cent against 7.35 per cent earlier on vehicle loans.

                      This special rate, which is effective from October 18, 2021, till December 31, 2021, is available for customers applying for fresh loans and also for those seeking transfer of loans, the bank said in a statement.

                      It added that processing charges are also waived for both home and vehicle loans till December 31, 2021.

                      Improved affordability, lowest-ever interest rate pushing home loan demand | Business Standard News (

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