Home Loans: Why Diwali might be the best time to buy a house

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The biggest banks and builders in India are banking on you for a revival. On offer are loans with 10-year-low interest rates, deferred payments, discounts. Some banks are even foregoing charges.

A flush of money from Mint Street is helping the fall in rates, letting lenders go all out to woo a relatively safe set of borrowers to cushion a Covid blow to asset quality.

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State Bank of India, Kotak Mahindra Bank, Punjab National Bank, Bank of Baroda are among the banks who have slashed home loan rates by around 15-60 basis points to 6.5-6.7% – the lowest in a decade.

Kotak Bank reduced rates to 6.5% – the lowest in the industry – on all loan amounts, fresh loans, and balance transfer cases from September 10 to November 8, as the bank looks to expand market share and increase the book size.

SBI is offering home loans at 6.7% irrespective of amount or the profession of the borrower, which is what concessional interest rates are usually tied to. The bank has also waived processing fees on home loans.

A majority of prospective homebuyers are looking to purchase a property in the next three months with self-use as a primary reason, a recent JLL-RoofandFloor survey shows. Experts believe that under that circumstance with stable home prices, the reduced loan rates will bolster residential sales.

India’s largest private bank HDFC Bank is partnering with fintech companies to accelerate its credit card reach during this three-month period.

The rate cuts are reinforced by Finance Minister Nirmala Sitharaman’s recent directive to state-run banks to accelerate lending and hold credit outreach programmes across India from October. “We are likely to see significantly improved traction in the housing segment during this period,” Anuj Puri, chairman, Anarock Group told ET.

Latest research shows that the highest demand is currently in the premium segment, where properties are priced Rs 80 lakh and above, he added.

“Sustained recovery and the resilience shown during the second Covid-19 wave are indicative of a fundamental shift in the sentiment towards home ownership,” said Sriram Krishnaswamy, COO, RoofandFloor.

With outreach programmes returning, credit flow to productive sectors is likely to swell. Some experts believe that developers may post record sales booking numbers in the second half of FY22.

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