The residential real estate sector is witnessing substantial credit growth supported by greater affordability for first-time homebuyers as well as government incentives. It is resulting in the rise in primary home purchase, particularly in the affordable housing segment. The demand for home loans is only set to increase in the near future.
Read on to know more about the factors that are driving the demand for such loans, and also leading to a significant increase in 2020.
- Lower loan interests
The Reserve Bank of India has been consistently reducing the repo rate, which has led the lenders to cut down their home loan interest rate by approximately 0.1%. Financial institutions are also refraining from imposing pre-payment charges.
The central bank is planning to initiate a volatile interest rate system. With the objective of increasing transparency, it seeks to link the loan rates to external benchmarks. It will ensure that transmission or rates become more transparent. It may drive the interest rates levied by banks higher than the base rate established by RBI. Hence, now is a good time to avail of the loan before the interest rate increases further.
- Increasing demand for home loans
Urbanization is increasing at a rapid pace. Such development coupled with increasing disposable income, reducing interest rates, and the rise in nuclear families has led to a surge in demand for homes. Consequently, the demand for home loans is set to go up.
- Stagnancy in property prices
The real estate sector is still at a standstill, and the property prices have stagnated. It amounts to a favorable situation for a prospective homeowner to avail of home loan offers which have become reasonably affordable.
- Social welfare schemes
Social welfare schemes like Pradhan Mantri Awas Yojana (PMAY) is driving affordable and accessible housing to economically and socially weaker classes of the society, including marginal groups. The policy also covers middle and lower-income groups, people with disability, scheduled castes and scheduled tribes and transgenders, among others. It allows them to avail of subsidized home loans. It also encourages ownership by women in which the property will have to be registered in their names. There are higher incidences of owning a property with one’s spouse due to the additional incentives.
- Fintech applications
The adoption of financial technology is enabling loan applications to be made online, increasing access to home financing as well. It empowers applicants to determine their eligibility for the loan. The lenders use big data for analyzing customer information to decide on their eligibility. The borrowers also find it convenient to apply for the loan on account of features like online verification, instant approval, and flexible loan amount, among others.
Housing loans are not only easily accessible but the eligibility criteria to avail it have also been simplified.
- The applicant will have to be an Indian resident.
- Salaried personnel should be between 23 to 62 years of age. Self-employed individuals will have to be 25 to 70 years of age.
- Salaried individuals need to have a work experience of 3 years or more, and the self-employed applicant must have a minimum of 5 years of continuity in the current business.
Bajaj Housing Finance Limited offers high-value Home Loans of up to Rs.3.5 crore which can be repaid over an extended tenor of up to 30 years. The loan has multiple features and also offers attractive interest rates. Under PMAY, the interest rate may amount to just 6.93%, and the borrower may end up saving Rs.2.67 lakh on interest.
The loan has additional provisions such as zero charges for foreclosure or part-payment, interest subsidies for PMAY beneficiaries as well as a fully customized property dossier. The applicant can use the EMI calculator for estimating monthly installments, and decide whether to avail floating or fixed rate of interest. The home loan online application is simple and quick. The home loan application form will have to be filled with personal, financial and employment-related details and complete the documentation process.
The easy availability of home loans along with affordable schemes like PMAY and the emergence of financial technology will be effective in meeting the surge in demand. The borrowers should check the eligibility criteria meticulously before applying for such a loan.