This Diwali, demand for home loans is expected to pick up despite the rising cost of EMIs. here’s why


It should be noted that during the holiday season, home buyers tend to invest in properties. The upcoming festival should be no different, especially now, as the real estate industry has made a comeback after the pandemic. Affordable home buying is expected to gain momentum. Home loans are one of the ways to buy a dream home as they eliminate the need for lump sum money. Home loans have flexible tenure terms and reduce the burden of raising significant cash to buy homes since you can repay your dues through monthly equivalent installments (EMI). In addition, there are tax advantages 1.5 lakh applicable on the principal amount of your home loan under Section 80C of the IT Act, among others.

In FY23, RBI raised the repo rate by 190 basis points in four consecutive policies to 5.9%, forcing banks and NBFCs to raise interest rates home loans, which made IMEs more expensive. However, demand for affordable housing remains robust and the holiday season should set the stage for strong growth in the sector.

The 5-day Diwali festival will start on October 22 with Dhanteras followed by Lakshmi Pujan (Main Diwali) on October 24 and end on October 26 with Bhai Dooj.

According to Sahil Shah – Chief Investment Officer at Certus Capital and, the real estate sector has made a tremendous comeback after the pandemic. CY2022 is shaping up to be one of the best years for home sales in nearly a decade after prices remained virtually flat, in real terms, between 2015 and 2021. Another factor pushing people to buy homes is their experience during lockdown when they were restricted to staying within four walls.

Shah added that “Most today are looking to buy/improve the best home they can afford. COVID-19 has also shifted the focus to spacious homes away from densely populated cities. For the larger segment affluent/HNI, second homes have emerged as a sought-after option, both from an investment and long-term use perspective Finally, there is some migration from Tier 1 cities to Tier 2, as some sectors embrace, especially technology, remote working.

Meanwhile, Manish Sheth, MD and CEO of JM Financial Home Loan, believes there are factors that will drive stronger demand for home loans in the upcoming holiday season. He said: “We need to understand that as the Indian economy rebounds above pre-covid activity levels, the same trend will be seen with consumer spending.”

“We can expect more Indians to splurge on the essentials, including houses. Home ownership has become a necessity rather than a luxury. If we are to analyze the growth rates of the credit across different geographies and sectors in India today, it is clear that we are at the start of a long term bull cycle and it seems unlikely that demand will decline anytime soon.This year’s monsoon has been good and the mood is positive among inland consumers as well,” Sheth added.

“All of these factors will fuel stronger growth in demand for home loans over the upcoming holiday season,” said the CEO of JM Financial Home Loan.

Also, Ravi Subramanian, MD, and CEO of Shriram Housing Finance points out that holiday cheer is back after 2 years as consumer sentiment is optimistic in this festive season. The real estate sector has seen sustained demand in the post-pandemic era.

Subramanian said this trend appears to continue to gain momentum over the upcoming holiday season when buyers tend to invest in properties as it is seen as a good time to buy a home. . Moreover, riding the wave of sustainability and potential investment, the secondary housing segment has become a sought-after option for buyers. Buyer behavior in cities has changed, and the preference between buying and renting is a trend we’ve seen gain prominence. Many homebuyers due to telecommuting and flexible working hours have moved to larger premises.

Further, the CEO of Shriram Housing Finance added, “We are seeing a shift in consumption, where buyers want to go from 1 BHK to 2 BHK and from 2 BHK to 3 BHK. work, we also see consumers buying or upgrading homes in their home cities, which is driving up demand in Tier 2 and Tier 3 cities for affordable home loans in the country. to the importance of pandemic-induced home ownership, will continue to drive residential sales this festive season in Tier 2/3/4 cities.Shriram Housing Finance is among the top 5 affordable housing finance companies in India and we expect the demand for affordable home loans this festive season to be 25-30% higher than the last 2 years.”

Here are some of the home loan rates from major banks and NBFC

SBI mortgage rate

SBI is offering a concession of 15 basis points to 20 basis points as a festive campaign offer between October 4, 2022 and January 31, 2023. Under the campaign, the interest rate ranges from 8.40% to 9 .05%. This is compared to normal interest rates ranging from 8.55% to 9.05% on home loans.

Interest rates are on regular home loans and will depend on the borrower’s CIBIL score.

ICICI Bank home loan rates

After RBI raised the repo rate by 50 basis points to 5.9% on September 30, ICICI Bank followed by raising its benchmark lending rate.

Currently, a salaried employee of ICICI Bank pays interest rates of 8.60% to 9.35% on home loans up to 35 lakh, and 35,000,000 75 million. On the above mortgages 75 lakh, rates range from 8.60% to 9.45%.

Interest rates are increased by 10 basis points to 15 basis points for home loans to self-employed borrowers.

HDFC Home Loan Interest Rates

This NBFC giant offers home loans starting at 8.4% per annum up to a maximum of 8.90%. Interest rates apply to home loans, balance transfer loans, home improvement loans and home extensions.

In addition, under standard home loans, NBFC offers 8.60-9.10% and 8.65-9.15% to women and others on loans up to 30,000,000. The interest rate is between 8.85 – 9.35% for women and 8.90 – 9.40% for others on home loans between 30.01 lakh to 75 million. Meanwhile, on home loans from 75.01 lakh and above, interest rates are 8.95-9.45% for women and 9.00-9.50% for others.

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