Concessional home loan rates adds to realty sector cheer this festive season

The State Bank of India has recently launched a campaign covering the festive season, offering concessions of up to 65 basis points in interest rate to home loan borrowers, which industry experts and realty developers believe will add to the home sales momentum during this festive period.

“Home purchasing is an emotive concept in India and the festive season  is an important period. Any concession on interest rates by banks and price discounts by developers will help boost sentiments,” said Vimal Nadar, who heads research at property consultancy Colliers India.

The increase in home loan interest rates since May 2022 has shrunk home buyer affordability by almost 15%, pointed Vivek Rathi, National Director Research, Knight Frank India. “The mortgage dependence of the lower income segment consumer remains high and any such banking sector relief directly benefits the consumer by increasing the loan eligibility, or lowering EMI, or both,” he explained.

The campaign which is active till December 31, 2023, offers varying degrees of adjustments based on customers’ credit ratings. Those with a CIBIL score of 700-749 will enjoy a concession of 65 bps, while the customer segment with a credit rating of 151-200 will receive a 45 bps concession. First time borrowers without a credit history will also see a benefit of 45 bps.

This is the first time SBI has included borrowers below a credit ranking of 700 and first time borrowers in such a scheme, a banking source informed DH on condition of anonymity.

There are other supportive factors in play. “You also have a lot of investors backing the market, which has brought in a bit of momentum,” said Rohan Sharma, a director at property consultancy JLL. 

According to Knight Frank India’s half yearly report, new residential launches in the first half of 2023 stood at 1,73,363 units, marking an 8% year-on-year increase. Sharma foresees bright prospects for home purchases in the upcoming two quarters.

Lastly, real estate developers are hopping onto the bandwagon of discounts and special offers too. The BCD Group has rolled out a two-year EMI waiver post property possession, company managing director Angad Bedi said. The offer will last till the festival of Diwali, he added. Others are known to offer enticements such as free hotel stays, international travel packages, assured rentals following property possession and so on.