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Real estate: property developers propose to reduce the burden of loans for home buyers

By on August 8, 2022 0
Property developers have started to take mitigating measures to lessen the impact of the higher interest rate regime on affordability levels for potential buyers and to support continued sales momentum.

Historically low interest rates over the past two years have helped home sales to pre-pandemic levels and, in some key markets, to historic highs. However, the inversion of the interest rate cycle appears to be a major source of concern for home sales.

Property developers including Tata Housing, Lodha Developers and Runwal Group are stepping in to protect buyers and sellers from the rising interest rate regime by capping the finance burden of interest on their home loans. Real estate brokers say a number of other builders are also considering offering this type of choice to buyers.

Tata Housing has offered to cap the interest rate on home loans at 3.5% for one year for buyers of 9 of its projects in 7 cities across the country, including Mumbai, Delhi-NCR, Bangalore, Chennai, Kasauli, Goa and Kochi. The buyer will only have to pay an interest rate of 3.5% on the loan, while the company will take care of the payment of the balance. This offer will be available until September 15.

“After the marginal rise in the repo rate, home loan rates are on the rise, which has had an impact on home buying sentiment. The past two years have been a prime example of the positive impact from lower interest rates, driving historic residential growth and real estate sales,” said Sanjay Dutt, MD and CEO, Tata Realty and Infrastructure. “(This initiative) will not only allow homebuyers to invest in the ‘residential real estate, but it will also encourage fence keepers to make the purchase decision.’

Lodha Group, listed as

, also locks in interest rates at 6.99% through 2024 for its customers, offering a roughly 1.5% advantage over existing home loan rates. Through this initiative, Lodha aims to protect home buyers against the subsequent increase in repo rates and the expected increase in home loan interest rates.

“The ‘interest lock’ initiative will give stability to the Indian buyer for the next 24 months and cover their home loans up to 1.5%. The last two years have seen a drop in rates. With this initiative, we aim to maintain the lowest rate in a decade or so for homebuyers,” said Raunika Malhotra, President, Marketing, Lodha.

Runwal Group has offered its homebuyers in its projects in Kanjurmarg, Mulund and Dombivali a one-year holiday from paying home loan installments to free them from worries about EMIs and loan interest rates real estate. This will apply to sales until August 15.

“As a company, we had the best month in July and we are confident that August will be even better. TheRunwal Group is focused on customer needs and these offerings reflect that philosophy,” said Rajat Rastogi, Executive Director, Runwal Group.

According to industry experts, the financial support provided through these initiatives should help buyers cope with the rising cost of owning a home and enable developers to convert demand into sales.

The Reserve Bank of India has raised repo rates by 140 basis points since May, and home loan rates have already been raised by lenders after the first two hikes in May and June. Currently, mortgage rates are hovering around 7.4% after hovering at a ten-year low of 6.6% for the past two years.

With the cumulative rate hike through Friday, assuming full pass-through, the affordability of potential home buyers drops by about 11%, that is, from the ability to purchase a home from a worth from Rs 1 crore to Rs 89 lakhs now.

With homebuyer affordability stretched, developers are launching such measures not only to offer support to homebuyers, but also to ensure continued momentum in home sales and are ready to share some of the financial burden. for it.