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Home loan interest rates are at a historic low. This coupled with benefits offered by Pradhan Mantri Awas Yojana (PMAY), piled up inventory and attractive schemes by developers have made it the right time to buy a house, especially for self-occupation.

Consider this: India’s largest bank State Bank of India (SBI) on March 1 offered interest concession of up to 70 basis points (bps) on home loans based on credit score and the loan amount. SBI home loan rate starts from 6.70% for loans up to Rs 75 lakh and 6.75% for loans above Rs 75 lakh. Women borrowers get a special concession of 5 bps. The offer is valid until March 31, 2021.

Similarly, hours after SBI’s announcement, Kotak Mahindra Bank Ltd also reduced its home loan interest rates by a further 10 basis points to 6.65% per annum. The special rate is applicable till March 31, 2021 and is claimed to be the lowest rate in the home loan market. It is applicable across all loan amounts.

Experts say, considering low home loan rates and discounts offered by developers, it is the right time to buy a house. Adhil Shetty, CEO, BankBazaar.com, said, “Interest rates are at a historic low. This is coupled with continuing PMAY benefits, choice inventory, and slashed registration costs in some places. If you can afford to buy a home for self-occupation, then there is no time like now.”

He added, “Banks are also looking to boost their lending portfolio. Historically, the last quarter of the financial year is when maximum investments in assets such as homes are closed. As a result, lenders come out with attractive schemes around loan products this time of the year to draw more customers. SBI has been the first to announce the rate cut. We can look forward to more banks coming out with such offers.”

Since the outbreak of pandemic, banks are flush with liquidity over the last one year. Because of huge volatility in the stock markets, there was a huge inflow into bank fixed deposits in 2020. Moreover, the new on-tap Targeted Long-Term Repo Operations (TLTRO) announced by the RBI allowed banks since October to borrow at low costs and lend to corporates in specific sectors including real estate. Shetty said, “The move ensures that bank will have adequate low-cost funds for lending. So even though there has been no reduction in the repo rates, banks do have margin to reduce rates.”

The concession in the home loan interest rates offered by SBI and Kotak Bank are valid till March 31. These banks have reduced their interest rates by reducing their spread. There has been no change in the external benchmarks. Ratan Chaudhary – Head of Home Loans, Paisabazaar.com, said, “Other lenders too may come with such temporary rate reductions. Over the longer term, factors such as changes in the RBI policy rates or other broader market interest rates, credit demand, liquidity in the banking system, etc would set the trend for home loan interest rates.”

In the long run, however, interest rates are expected to go up. Atul Monga, co-founder and CEO, Basic Home Loan, said, “For the first-time homebuyer, this is the most opportune time to purchase a house. With the economy slowly reviving and the investor confidence returning as Covid vaccine rollout expands, the interest rates are expected to go up over the next 12-18 months. A better indicator will be when the NPAs for the loans disbursed during the last 12 months, are validated against the provisions.”

Investing in a new house has become attractive given a lot of inventory is available at reduced costs in the market. With low-cost financing options and attractive offers from developers this is definitely a buyers’ market and presents an excellent opportunity for potential home buyers to get their dream homes.

Similarly, amidst deals, discounts and cheaper home loans, nearly 62% of respondents in the CII-ANAROCK COVID-19 Sentiment Survey consider it expedient to buy homes right away. The survey showcased that 24% respondents have already booked properties (81% of this segment were previously unsure of buying) and 38% opted for newly-launched projects. The report was unveiled by CII and knowledge partner ANAROCK at the 3rd CII Real Estate Confluence themed ‘Indian Real Estate Vision 2025’.

The report states that affordable homes (below Rs45 lakh) see highest preference post-COVID, with over 40% share against 31% pre-COVID – an increase of 9%.  Anuj Puri, Chairman – CII Real Estate Confluence 2021 & Chairman – ANAROCK Property Consultants said, “The survey underscores the massive impact that the coronavirus pandemic has had on home-buying decisions. The work-from-home and online education culture has resulted in buyers seeking larger homes, even if it entails moving to peripheral areas. Surprisingly, new launches are gaining traction post-COVID. 26% of the survey’s respondents will opt for homes in newly-launched projects, which is an increase of 4% over the pre-COVID period.”