Favorable demographics, better affordability of residential properties and historically low mortgage rates are boosting demand for home loans, mortgage lenders have said.
Several major banks, mortgage lenders and housing finance companies significantly reduced their mortgage interest rates during the festival period to take advantage of the resumption in housing demand after the second wave of the COVID pandemic -19.
In some cases, the interest rate on home loans is as low as 6.5 percent.
Asked about the likely impact of his decision to cut mortgage rates for the holiday season on home loan disbursements, HDFC chief executive Renu Sud Karnad said lower interest rates are helping , but that it is only one of the many variables of the recovery in demand. for home loans.
“Housing today is much more affordable than it has ever been before. Over the past two years, house prices have more or less remained the same across the country while levels of income increased, ”she noted.
Karnad further said people are moving to larger apartments due to additional space requirements after the outbreak of the COVID-19 pandemic.
“Working from home, home education and home entertainment due to the pandemic have also made people aware of the need for extra space at home,” she said.
Y Viswanatha Gowd, Managing Director and CEO of LIC Housing Finance, said the company is positive as there is a demand for ready-made homes.
“The pent-up demand is already there and even the labor market is recovering. Even the feelings of our customers are on the rise because the markets are opening up. The convenience of the vaccination has given people more confidence to move around and physically go and see the properties and choose, ”said Gowd.
Gowd expects housing demand to remain strong during this festival season and beyond, particularly in the ready-made home segment and the affordable home segment.
Real estate consultant Colliers India, new CEO Ramesh Nair, said several Indian banks had cut mortgage rates ahead of the holiday season to encourage homebuyers.
“This will drive demand for housing across the spectrum – in the affordable, mid-range and high-end segments. The stage is already set for an upturn in housing demand. This was made possible by stable house prices, rising wages in tech sectors and the greater need to own a home, ”he said.
Nair said the recent rate cuts by banks are a positive move for home buyers and will encourage home buying on the close.
According to Nair, in August 2021, home loan disbursements increased 9.2% from the previous year.
“This is a good sign, and home loan disbursements will increase further in the coming months,” Nair added.
Karnad further pointed out that the demand for housing and housing loans has improved due to various positive factors.
“So a combination of factors namely favorable demographics, improved affordability, lowest ever mortgage interest rates in India are driving the demand for home loans,” said HDFC MD.
Karnad said feelings about the real estate market and housing finance have improved thanks to a strong pick-up in economic growth and smaller-than-expected job losses.
“… much smaller job losses compared to what was feared during the pandemic, followed by a good resumption of economic growth and sentiment led to an improvement in confidence which is very vital for make the biggest investment decision in life, which is to buy a house, ”she observed. .
Regarding home sales and mortgage disbursements during the holiday season, Karnad said the holiday season is seen as a good time to buy a new home and it is boosting the real estate market in India.
“Having said that, we have seen healthy growth in mortgage loans not only during the holiday season, but also during the normal course of the year…” she said.
V Swaminathan, CEO of Andromeda and Apnapaisa, said banks were looking to capitalize on this holiday season by offering home loans at record interest rates.
Swaminathan said the home loan market in the country has rebounded and recorded 9.6% annual growth in outstanding portfolio (PoS) in the third quarter of 2020-2021.
Meanwhile, as part of the festive offer, Bank of India on Sunday announced a 35 basis point cut in interest rates on its home loans and a 50 basis point cut in mortgage interest rates. car loans, the minimum rate now starting at 6.50% against 6.85. percent on mortgage loans and 6.85 percent against 7.35 percent previously on auto loans.
The special rate, which is in effect from October 18, 2021 to December 31, 2021, is available to customers seeking new loans as well as those who wish to transfer loans, the bank said in a statement.
He added that the processing fees are also waived for home and auto loans until December 31, 2021.
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