Real estate developers expect the concessional home loan package announced by public sector banks On Monday to bring down interest rates on home loans across categories and spur a further demand for housing from them.
Government-owned banks On Monday announced that they will offer home loans up to Rs 5 lakh at a rate of 8.5 per cent and between Rs 5 lakh and Rs 20 lakh at 9.25 per cent. But property developers in cities such as Mumbai and Delhi sell houses in the bracket of Rs 50 lakh to Rs 5 crore and banks have kept big-ticket loans out of their cuts.
“Until now, they were not doing anything. It makes a lot of difference. Interest rates across the board will come down as banks’ cost of borrowing comes down. This is in line with RBI’s statement that rates need to come down,’’ said Niranjan Hiranandani, managing director, Hiranandani Constructions.
Added Pradeep Jain, the chairman of Delhi-based Parsvnath, “They are bound to reduce rates for loans above Rs 20 lakh and those announced On Monday are in tune with cuts in CRR, repo and reverse repo rates. When they call it priority sector, they should treat it accordingly,’’ Jain said.
However, experts believe the property market will take at least a year to revive from the current conditions.
“I expect a slow improvement in the property-buying sentiment. Once the sentiment improves, buying will come into the market. I see major buying in the Diwali of 2009,’’ said Akshaya Kumar, managing director, Park Lane Property Advisory.
The banks’ move is also expected to boost affordable housing in the suburbs of cities such as New Delhi, Mumbai and Bangalore. Companies such as Unitech and Puravankara are planning to launch their affordable housing projects in the National Capital Region (NCR), Banaglore and Chennai.
“It is an indication from the government’s side to developers to focus more on this segment of the market and we will surely reciprocate to it by launching products and projects in that price bracket,” said Sanjay Chandra, managing director, Unitech.
“We could not have asked for more. We are launching projects in the Rs 12-20 lakh category in Bangalore and Chennai soon,’’ said Ravi Ramu, director, Puravankara Projects.
