home loan – Page 5 – FindMyProperty

The government will give a benefit of 2.4 lakh to first-time home buyers with taxable income below Rs 18 lakh a year, which would be a game changer for the sector. The scheme is likely to be informed shortly and will be effective from January 1, 2017. This scheme would be a game changer. The amount is equivalent to the total interest subsidy over a 20-year loan and will be given upfront to the housing financing company, through nodal agencies such as National Housing Bank and Hudco to reduce the outstanding loan. For a 15-year loan, the value of the benefit would be Rs 2.2 lakh.

Affordable housing has become an important sector. For the last two years, the government has been trying to make an environment where affordable housing can be pushed ahead. Home loans should cover stamp duties which are 10% of the cost. It will make it very easy for homebuyers to acquire property since there will have easy access to funds.

Government should help reduce construction costs and suggested SEZ-like structures for affordable housing. When it comes to real estate developers, cost of land is insignificant for affordable housing.

Bank should extend the benefit of lower interest rates beyond the retail sector, indicating that investors should cut the cost of loans for companies. Banks had benefited from RBI’s reduction in policy rates as well as the inflow of low-cost deposits in current and savings accounts in November and December. The average lending rate reduction (by banks) has been less.

As sustained by RBI, as well as the government, banks have pocketed the gains of the rate reduction and only in late December after a prod by the Centre the banks pared their benchmark rate by up to 90 basis points. But the reduction for home loans was lower and for other categories even lower.

The main focus of the bankers as they believed that lower rates could encourage demand was more on the retail segment, unlike the corporate sector which is besieged by a combination of excess production capacity and a high level of debt.