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Turning the tide? Representational pic

Bank Rates Low, Realty Sales High

Race to woo customers has begun

Property developers look to clear inventory, good times ahead

MUMBAI, Sep 17 (The CONNECT) - Several banks like the State Bank of India (SBI), Kotak Mahindra, Bank of Baroda (BoB) and Punjab National Bank (PNB) are offering loans at record low-interest rates to attract a large number of customers for the festive season.

State Bank of India (SBI) will charge home loan borrowers an interest of 6.7% based on their credit score, irrespective of the loan amount. The offers are available to all segments of borrowers irrespective of the profession of the borrower. The 6.7% home loan offer is also applicable to balance transfer cases.

Kotak Mahindra Bank has reduced its home loan interest rates by 15 basis points (bps) from 6.65% to 6.50% p.a. as a limited period festive season offer beginning 10th September and ending 8th November 2021.

Bank of Baroda (BoB) is offering a waiver of @0.25% in the existing applicable rates for home and car loans. In addition to that, the bank is also offering a waiver of processing fees in home loans. Now, home loan rates will start at 6.75% and car loan rates start at 7.00%.

Punjab National Bank (PNB) too has slashed the repo-based lending rate by 25 basis points (bps) to 6.55%.

Realtors feel that these interest rate cuts could be a major factor in boosting the home sales this festive season.

Latest ANAROCK research reveals that the highest demand is currently in the premium segment, where properties are priced INR 80 lakh and above. This is primarily the result of homes now doubling as offices and e-learning centres. This lending rate will also not restrict which cities will benefit from it – in previous concessional rates limited to budget housing, only tier 2 and tier 3 cities could really benefit. With this democratized interest rate, SBI also addresses the huge housing demand in the metros. This move is aptly timed, coinciding with the beginning of the festive season. 
This year, said ANAROCK Chairman Anuj Puri, "we are likely to see significantly improved traction in the housing segment during this period". Waiving of processing fees and occupation-linked interest premium are added levels of savings. Cumulatively, this package is the most compellingly attractive offering ever extended by a housing loan lender and it is reasonable to expect that other lenders will follow SBI's footsteps in order to remain competitive, Puri said.
Pritam Chivukula - Co-Founder & Director, Tridhaatu Realty and Hon. Secretary, CREDAI-MCHI said, "The reduction in home loan interest rates by leading banks for a limited period have extended the best buying opportunity for the homebuyers. The banks are competing to grab the home loan customers before the fiscal year ends. Currently, the home loan rates are at an historic 15 year low, as banks compete in a market with low credit demand. The benign interest rates environment will continue for some time and it is unlikely that interest rates will fall further from the current levels. For the next few days, the buyers can swoop in on good deals on the back of rock-bottom interest rates on home loans along with festive offers from good developers on the eve of expected price rise. We can already see that the demand for residential properties has picked up now as people are beginning to believe that this is the best time to buy a property."

Ashok Mohanani - President, NAREDCO Maharashtra said, "There is already a growing desire of owning a home as consumers look at it as a necessity in this unprecedented time of the COVID-19 pandemic. With the onset of the festive season, there is a stiff competition amongst the financial institutions to provide the consumers with the best home loan interest rates. This is the best time to buy a home as it gives the aspiring homebuyers a lifetime opportunity to purchase their dream home with various festive offers as well as all-time low interest rates. These factors are also proving to help spur the real estate demand that was temporarily hit last year as a result of the pandemic."

Jayesh Rathod, Executive Director, The Guardians Real Estate Advisory said, "The move to reduce interest rates by few banks is encouraging and will create competitive housing finance options for the home buyers and eventually pave path for robust housing demand. We have been maintaining since long that banks need to pass on the benefits of the reduced repo rates to consumers and we are happy to see the same happen now. The low interest rate regime is going to be a game-changer for the whole real estate sector especially at a time when the economy is on a recovery trail. It will also augur well for ready-to-move-in homes and the affordable housing segment. Both of these categories will benefit immensely from the reduced rates. From the consumer perspective, this is going to be the last call to take advantage of the bank offers as a difference of even a half percentage on the interest rate on a housing loan can save lakhs of rupees of the prospective buyers."

Cherag Ramakrishnan, Managing Director CR Realty said, "Considering the auspicious festive season ahead, the timing of the reduction in interest rates by leading banks couldn't have been better. The real estate market has seen decent sales this year and this reduction in interest rates would further help to keep up the sales momentum."

Bhushan Nemlekar, Director, Sumit Woods Limited said "The reduction in home loan rates by leading banks is going to help the demand side immensely. The real estate sector has benefited immensely from the record low home loan rates. Currently, the all-time low, sub-7% interest rates are encouraging consumers to proceed with their purchase and quickly close their transactions. Low interest rates also help enhance eligibility for home buyers thereby bringing more customers into the marketplace."

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