Given the current economic crisis prevailing globally, numerous economic challenges across various sectors are being witnessed by the global markets. The real estate sector is also included among them. However, according to predictions made by some experts, even during this bleak scenario, home loan markets in India would experience a CAGR of around 22%.
There are many factors that are responsible for driving the home loan in India. It is also being said that considering these socio-economic factors would make a contribution to the Indian economy and also improve the standard of living of Indians. Some of these factors include:
- Low current home loan interest rate
Despite the current economic scenario, India boasts of having low home loan interest rate among all developing economies existing on a global scale. Indian markets have been pushed by the lowering fixed deposit or savings rates to make more investments in the real estate industry, which has additional opportunities for returns due to the price check in this industry.
In addition to all these, working capital loans have experienced a suspension of interest which has boosted demand, encouraged investments, and buyers have also gained from low cost home loan EMIs.
- Residential rents equivalent to EMIs
It has come to a realisation of all salaried and self-employed individuals that paying rent for accommodation and the EMIs which need to be paid for a home loan are almost. The outcome of this is that there has been a huge increase in the utilisation of home loans to purchase homes instead of opting for house rental options.
With the availability of inventory belonging to every asset class and which can be moved readily, potential buyers are more interested in purchasing a house as they can get hold of a property according to their budget and requirements.
- Financial measures taken by RBI
The Reserve Bank of India has undertaken numerous steps to fuel demand in the Indian markets, offset the economic slowdown effects, and protect the current economy. The measure undertaken includes extending loan moratoriums by a period of 3 months and a huge reduction in repo rate and reverse repo rate. The reduction in the repo rate has, in turn, caused a reduction in the home loan rate of interest. In addition to this, RBI has also allotted Rs.5000 crore for infusion in National Housing Bank so as to cause improvement in buyer sentiments.
- Attractive schemes
Builders and developers are offering attractive schemes like paying EMIs late and plans linked to construction, which is driving individuals to opt for a home loan. There are several organisations that have opted to offer discounts to end-users. Along with it, they are also offering extra inducements, which include a facility to refund the booking amount, cashbacks, statutory fee waivers, easy payment structure.
- Policy reforms
The real estate sector has received support in the form of several policy reforms from the Indian government and various other statutory bodies. Some of these reforms include the Pradhan Mantri Awas Yojana (PMAY) and the Credit Linked Subsidy Scheme (CLSS) of the Middle Income Group (MIG) individuals. Along with these, several other measures have been implemented so as to infuse transparency in this sector include the Benami Transaction Prohibition (Amendment) Act, implementation of The Real Estate Regulations Act (RERA), and levying GST.
Individuals must be aware of the eligibility criteria and home loan tax benefits before opting for a loan.
The home loan eligibility calculator can be considered to be a handy tool to check the eligibility criteria.
Hence, it can be concluded that all of the above factors summed up together are responsible for boosting the Indian home loan market.