The crucial interest rate cut implemented by the banks was only a spark that the real estate market was looking out for. The realtors are encouraging the actions taken by the lenders including ICICI Bank, State Bank of India (SBI), and Housing Development Finance Co. These lenders have shed their unwillingness to pass on the past rate cuts made by the Reserve Bank of India to the customers.
The interest rate reductions vary from 15 basis points or bps to 35 basis points. It can fuel the real demand that is already being strengthened by the smart cities, Digital India programs and affordable housing. These focus on minimizing the population inflows in the cities that are bursting at the seams.
The State Bank of India is providing home loans at interest rates of 9.55 percent. On the other hand, HDFC has cut the lending rate lately and it is providing the loan at 9.65 percent per annum. The women borrowers will get the loans at 5 basis points lower rate. One basis point is 0.01 percent. Also, ICICI followed its peers and reduced the lending rates to 9.65 percent for the loans up to Rs 5 crore for the salaried professionals. Again, the women borrowers will get 5 bps cheaper rates.
The real estate industry has been staggering for a few years due to poor demand because of unaffordable prices. The RBI’s high rate rule to counter the inflation had prevented the people from buying new properties. Now, the cutting of rates by 50 bps in the last month has totaled to 125 bps since the month of January and the real estate market is looking up.
Before this, there was a despondent mood in the real estate industry. The sales volume plunged by 19 percent in the first half of this year in comparison to the first half of the last year. The new launches also dropped by 45 percent during this period.