Is it the right time to take out a mortgage?

The past two years have been an outlier for the mortgage industry with interest rates hovering at record highs of less than 7%.

Nalin Jain, Chief Client Officer and Chief Operating Officer at Godrej Capital, said: “Low house prices and stamp duty reductions, coupled with pandemic-induced lifestyle changes, have further changed the sector trajectory. But, given the current macroeconomic landscape and inflationary concerns, the upward move in interest rates was imminent.

While the move may dampen buyer sentiment briefly, industry experts say now is still a good time for buyers to take advantage of low home rates.

Here are some of the reasons for this:

On the mortgage front, despite rising interest rates and house prices, “we are living in a very low interest rate environment compared to the pre-pandemic era. Although rates may seem high at starting rates hovering around 7%, they have always been much higher,” says Jain.

Now, applying for a loan can help you buy a home before home financing gets even more expensive. Note that many housing finance entities nowadays offer innovative and flexible repayment options such as EMI customization and longer occupancy terms to improve affordability.

Jain points out, “The continued rise in commodity costs has pushed up property prices from a residential real estate perspective. However, these rates are expected to reverse once the global supply chain is restored. Many developers may offer homebuyers discounts to sell their inventory and increase their cash flow to offset the current markup.

Additionally, experts say incentives, such as relief from stamp duty and registration fees, can also be a silver lining for homebuyers. Additionally, Jain says, “Improving job prospects, evaluating salary structures, and tax benefits on home loans could keep consumer morale up.”

In short, he is of the opinion that a rising interest rate cannot be the only reason a home buyer should not seek home financing. In fact, given the macroeconomic trends, buying a house is highly recommended for those looking for a residential property for personal accommodation,” adds Jain.