News: Home loan interest rate cut may drop further: Credai-08.01.2017

Home loan interest rate cut may drop further: Credai

Date created 08.01.2017 19:19:46

Home loan interest rate cut may drop further: Credai

Even if the slash of interest rates in home loans has inspired little immediate impact from the homebuyers’ market on January 2, builders' groups feel that the interest rates would eventually fall further over a period of time and settle down closer to 7% in times to come.

On January 2, the SBI announcements of a slash of interest rates to 8.9% have not inspired any immediate impact from buyers groups or even builders. While the builders claimed the slash in interest rates was too little to make any real impact at entry level traffic to primary market, the homebuyers claimed with builders already stuck with existing commitments, buyers' sentiments despite slash of interest may be bleak at the moment.

"We were expecting interest rates to be slashed to about 7.5% to inspire any real interest from the primary market. But 8.9% is still too high to make any direct impact on the market with immediate effect," Amit Modi, vice president Credai, western UP said.

The buyers who are already on a wait-list of builders in Noida or even Gurgaon feel the pressure on builders is now to deliver on existing bookings. "The builders have already slowed down following demonetisation, so we don’t think the buyers have any immediate enthusiasm to go and book apartments. The main homebuyers are the middle class, and they are now cautious about how they are going to invest their funds, or take up new financial commitments," Shweta Bharti, general secretary, Noida Extension Flat Owners Welfare Association, said.

But other voices in Credai sounded hopeful that the slash in home loan rates by SBI could push the primary market in due course. "Of course, we think the primary market will get a boost with the cut in interest rates. We are now hopeful that the rates would eventually fall further and would settle down to around 7% in times to come," Credai NCR president Manoj Gaur said.

However, just a slash in loan interest by SBI may not have any real impact, feel buyers until private banks follow suit. "Most buyers get their home loans funded by private banks, so only when the private banks slash their home loan interest rates, would the market experience a shift." Bharti added.

Sharmila Bhowmick, Economic Times, Delhi/NCR