If you are still waiting to buy a new home, now is a great time. Kotak Mahindra Bank and State Bank of India (SBI) cut mortgage rates effective March 1. The two banks cut interest rates by another 10 basis points (100 basis points = 1 percentage point).
Kotak Mahindra Bank has cut mortgage rates to 6.65% per annum, the lowest in the market. The State Bank of India, a large government company, offers home loans at an interest rate of 6.75% for loans up to Rs 75 lakh and 6.75% for loans above Rs 75 lakh to Rs 5 million. Customers applying for a mortgage using SBI’s Net Banking YONO app will receive an additional 5 basis point interest rate cut. The bank also waives processing fees for all mortgage applications.
Today, mortgage rates have been low for 15 years as banks compete in a market with low demand for credit.
Both banks will offer this reduced rate on home loans until March 31, 2021. Experts believe banks will corner home loan customers before the end of the fiscal year.
The two important factors every home buyer should consider are mortgage rates and home prices.
For potential buyers, the interest rate on home loans is the most critical consideration. And interest rates have fallen to record lows thanks to the reserve bank’s accommodative monetary policy, which is driving economic growth.
Rising retail inflation has increased the reserve bank’s ability to lower interest rates further, for better or for worse, given the mandate to keep inflation at nearly 4 percent, according to the consumer price index. (CPI). “With the interest rate approaching a record low and inflation still above the RBI target level, the interest rate is unlikely to drop sharply from where it is today. With real estate prices also low, now is a great time to reserve your dream home, ”said Mani Rangarajan, group operations director for Housing.com, Makaan.com, and PropTiger.com.
With high inflation due to a number of factors, including supply disruptions, the RBI is unlikely to cut interest rates in the near future until the inflationary spiral is finally mastered. This is probably a good time to buy a property and keep EMIs low and affordable.
If you get a 30 rupee home loan for 15 years. For example, at an interest rate of 9 percent, your EMI will be Rs 30,500. If other things stay the same, your EMI will have an interest rate of Rs 26,500. 6.75% each year. A lower interest rate also gives you the additional option of using a shorter term to pay off the loan.
The real estate market has been through a weak period due to a lack of demand and possibly oversupply. Property prices have only risen 38% over the past decade, according to a report published earlier this year by Anarock Property Consultant. Due to the pandemic, prices in the housing industry have fallen between 5% and 10% or more in all segments. The reasons that have negatively impacted the sector are job losses and wage cuts.
“Taking into account cash discounts, developer programs, and offers, and government incentives for home buyers, the effective price advantage is 5-15% compared to pre-COVID levels,” says Samantak Das, chief economist, and research director at JLL India.
Are prices dropping more? The answer could be no.
“There may be a 1 to 2 percent price correction exemption in some pockets, but most developers don’t have much room to lower prices,” says Das.
The improving economy could ultimately bring property prices back to at least pre-COVID levels. In terms of price, this is probably the best time to buy a property.
The interest subsidy under the Credit Linked Subsidy Program (CLSS) is a great benefit for first-time home buyers. Under this program, a buyer who obtains a home loan from a bank, real estate finance company, or other financial institution is eligible for an interest subsidy of up to Rs. 2.67 lakh.
In some states, the government has lowered stamp tax rates. Also, there is no GST for houses ready for occupancy.
And the icing on the cake, the multitude of offers and holiday programs offered by various developers today. However, evaluate holiday offers and programs in monetary terms and request a refund. A move-in-ready home is always better because you don’t have to worry about transmission delays.