Banks’ outstanding home loans have registered a double-digit growth in the first five months of the current financial year, despite the Reserve Bank raising the prime interest rate by 140 basis points (bps) three times during the period. The reason for this increased home loan rate.
Another hike in the repo rate was impacted by 50 bps in September.
According to reserve Bank of India According to the data, the housing loan outstanding of banks was Rs 8,60,086 crore at the end of FY 2016-17, and has increased to Rs 16,84,424 crore at the end of 2021-22.
Banking and real estate industry experts are of the opinion that though interest rates are important, they do not deter the home buyer as the decision is based on current income and future prospects.
At the same time people are also becoming aware that interest rates will go up and down during the life cycle of the loan, which is usually around 15 years.
Commenting on the growing loan portfolio of banks, HT Solanki, General Manager – Mortgage & Other Retail Properties Bank Of BarodaSaid that affordability is an important factor as buying a home is usually on borrowed funds.
“However, home loans are also a long-term product and customers expect interest rates to change during the tenure of the loan. Moreover, the average wage growth of 8-12 per cent in the country also helps in reducing the interest rates. Effect of rate hike to a certain extent,” he said.
RBI data showed that banks’ home loan outstanding grew in the range of 13.7 to 16.4 per cent per annum in each of the first five months of the current financial year.
The outstanding amount has increased to Rs 17.85 lakh crore at the end of August 2022.
at rising interest rates, HDFC Managing director Renu Sood Karnad said: “I don’t think the hike in interest rates will have any impact on home loan demand.”
The senior banker said that unlike other products, the home buying plan is made after a lot of hard work within the family.
He added that housing loans have a floating interest rate and unlike car or consumer durable loans, they are generally of longer tenure, ranging from 12 to 15 years.
“And so the increase in interest rates has relatively little impact on cash flow. Typically 2 to 3 interest rate cycles run over a loan time frame of 12 to 15 years. That’s why borrowers understand that interest rates also last for such a long time. may come down during the tenure of the loan,” Sood explained.
Country’s largest mortgage lender in process of merger with HDFC HDFC bank,
Both Karnad and Solanki, as well realtors said that the demand for housing remains consistent and sales of residential properties are witnessing a strong improvement in the last 12-15 months.
Chief Economist, Asset Advisor, JLL India feudal maid The home loan interest rate had come down from an average of 9.45 per cent to 6.95 per cent by April 2022 from March 2016 onwards.
This was in line with the RBI’s policy rate (repo) which fell from 6.25 per cent in March 2017 to 4 per cent in March 2022.
Noting that the RBI has increased the repo rate by 190 basis points in the current fiscal, Das said the transmission in home loan interest rate is in the range of 140-150 bps which would take the mortgage rate to around 8.85 per cent. Is.
“However, home sales are still strong and may touch a decade high by the end of 2022. This coupled with stable pricing and relatively low home loan interest rates as compared to the peak of 10-11 per cent is a strong festive season. May be due to demand. Saw it 8-10 years ago,” he said.
Das, however, cautioned that the continuous increase in home loan interest rates and EMI Emotions can be disruptive.
Recently, property advisor Anarock, one of the leading housing brokerage firms, reported that housing sales in seven cities grew by 87 per cent to 2,72,709 units in January-September and the entire 2019 pre-COVID. Violation of transactions observed in the year.
The consultant tracks the primary sales of seven major cities – Delhi-NCR. Mumbai Metropolitan Region (MMR), Chennai, Kolkata, Bengaluru, Hyderabad and Pune,
Sales in the January-September period of 2021 stood at 1,45,651 units.
The January-September figure for this calendar year is higher than the 2,61,358 units sold during the entire 2019.
The sale of residential properties declined to 1,38,344 units in 2020 due to the adverse impact of the COVID-19 induced lockdown.
India’s primary housing market revived last year on increased demand and sales rose to 2,36,516 units in 2021. The strong momentum continued till September this year.
Realtors are hoping that sales momentum will continue despite the rise in mortgage rates. Property experts are banking on pent-up and festive demand sail Through.
(with inputs from PTI)