Top Factors Pushing Housing Loan Market in India

Almost the entire world is battling the Pandemic of the Novel Coronavirus (COVID-19). And India is not an exception. The country has already seen more than 80 lakh positive cases and 1 lakh+ deaths. It is owing to the global economic crisis that the Pandemic has led to. And it is not surprising to note that markets across the world, including the home loan, real estate market and more are affected. 

However, owing to the ongoing scenario, it is reassuring to note that experts are of the opinion that CAGR of around 22% is expected in the home loan market of India. 

The factors that are expected to push the housing loan market in India include impetus of the Government on affordable housing and home loan interest rates. And it is also the shortage of housing in India. 

Salaried and business class has understood the significance of residential rental payments are equal to the EMIs that they will need to pay for their homes. The situation has led to more buying of houses via the modes of home loans and not rentals. 

Ready to move inventories are available in many asset classes. People are now finding it appealing to purchase homes. It is because they are able to find a property matching their needs and budget. Even though the overall economic environment is common with uncertainty, the fear factor coming out of job redundancies is also driving people to put their money in their own home instead of the rental homes. The increasing ambitions of the younger lot earning higher pay packages and digitization have led to the home loan low interest rate. 

India is continuing to have one of the lowest home loan rates. The current home loan interest rate in India is the lowest among developing countries. It is owing to the reduction in the interest rate offered on Savings and FD that Indians are investing in real estates. 

The scope of an increased Return on Investment (ROI) is being experienced due to price check in the real estate sector. 

What’s more, the deferral of the rate of interest on working capital loans (to be repaid by March 2020), has not encouraged investment and led to boosted demand. Another thing is that it has benefitted the homebuyer from inexpensive home loan EMIs. 

Another aspect that is leading people to opt for home loans is offering lucrative builder schemes. It includes late EMI payments and construction based plans. Despite the off mood owing to COVID-19, stamp duty reduction and easy customized EMIs has led to segment revival. Nowadays, you can find many organizations offer discounts to users with perks like the refund of the booking money, statutory waivers of the fees; cashback offers with the structuring of easy payment and many more freebies. 

Another thing that is pushing the home loan market in India is monetary measures being taken by the Reserve Bank of India. To provide effective relief amidst the COVID-19 times, the country has already seen higher ever repo and reverse repo rate reduction. 

Also, the extension of the EMI Moratorium period by another 3 months has added the much needed fuel to the demand in the market. The Central Bank of India has also come up with the announcement of Rs.500 crore being infused in the National Housing Bank. It is a move to improve the sentiments of the buyers. 

The Central Government has supported the sector via multiple policy reforms. The Government is committed to its vision of ‘Housing for all’ under the aegis of the Pradhan Mantri Awas Yojana (PMAY). Under this, the Credit Linked Subsidy Scheme (CLSS) for the Middle Income Group (MIG) has now been extended till March 2021. 

Also, a diverse scheme introduction like the GST Tax, Benami Transaction Prohibition (Amendment) Act and more are being brought. They are also helping to bring back the cheer and transparency in the sector. RERA is another revolutionary step that is also instilling confidence among homebuyers that their rights would be protected.