Home truths of home loans

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For any middle-class citizen, buying a home remains the most cherished goal. The pandemic has brought financial disruption but prospective homebuyers now have a golden opportunity to take the plunge. The latest round of reduction of interest rates on home loans by a few major lenders demonstrates that they have acknowledged that the pandemic’s influence on the shift in working styles will result in increased demand. With work from home and online education likely to pick up pace, people will be needing larger space to accommodate a makeshift office or a classroom at home.

The country’s biggest mortgage lender HDFC has now followed leading banks like State Bank of India, Bank of Baroda, Kotak Mahindra Bank and Punjab National Bank in slashing home loan rates. They have realised this is the right time to tap into the interest levels and expand the retail loan segment as risks related to corporate loans are expected to increase due to the impact of the deadly Covid-19 pandemic. This is a good time to invest in real estate in big cities. With increments coming in, that is an added way of ensuring that the additional money is invested in a tangible asset.

Lenders are expecting the rate cuts to act as a catalyst in helping homebuyers take the plunge. The upcoming festive season will also see developers come up with attractive offers to lure the ‘fence-sitters’. So, go for your dream home right now and utilise the offers by the lenders. But do your homework before signing on the dotted lines and realign your budget accordingly.

On another plane, a piece of new real estate being sold brings good fortune for a number of key sectors such as steel, cement, paints and electricals apart from home décor. Economists are also waiting for real estate to pull up these vast sectors of the economy. Once the revival takes place and the Reserve Bank tweaks the monetary policy to tighten liquidity, home rates may not stay this cheap.