repo rate

Real Estate hit by demonetisation, wait for ‘White Money’ buyers

Real Estate Sector seems to have taken a big hit from demonetisation, with builders seeing their sales drop in last three months and now holding their hopes on buyers coming to market with ‘white money’.

Buyers appear to be holding back their purchase plans on hopes that interest rate would fall and property prices would be fall post demonetisation in residential sector, which some see as a cleansing of a sector infected with prohibited funds. As per industry data, resale or secondary market, where maximum black money gets deposit, has been worst-affected as transaction almost dried up and barring some interest in trademark properties, due to lack of cash after fighting of old 500 and 1000 notes.

Though, many builders and property experts also said it is too early to say that black money has been completely removed from the sector though it has become especially difficult to effect cash transactions as of now. But previous year have been many policies with RERA (Real Estate Regulatory Act), Benami Properties Act and low circle rate, would be help in destroying black money in real estate sector to a great scope and improve the industry value.
Due to demonetisation, in primary and secondary market, were affected during November and December as buyers postponed their buying decisions not only in real estate but across the entire sector. Sales in the primary market have started to improve, with banks lowering interest rates on home loans, in NCR Market, which huge delay in projects completion. Real Estate Market will become totally transparent.

January 16, 2017 / by / in , , , , , , , , , ,
Good News for borrowers, landing rate cut by SBI

Lending rate cut by SBI (state bank of india) is good news for borrowers, mainly customers with long term home loans of 20-25 years. Banks don’t change the EMI amount when rates change, but changes of the loan to align with new rate. A20 year loan shorter by almost three years, but loans which are nearing their end may not be affected. 90 basis points rate cut has reduced the tenure of a 25-year home loan by almost five years.

However, many loans taken before April 2016 continue to be linked to the base rate, shifting to new MCLR (Marginal cost of funds lending rate). Borrowers will pay a conversion fees for moving to MCLR, but this cost would be recovered in no time due to lower EMI. Those loans should actively consider this in New Year with long term. But when interest rates are growing, a slower revision in the lending rate protects the customer from the rate hike.
Some banks rearrange their rates every quarter, but others banks could wait for up to a year to make change. This works both ways for borrowers. . In a falling rate regime, it is better to go with a lender who resets the rate very often (every quarter or so).

Before SBI announced the cut, IDBI Bank had cut lending rates. Now, other banks will have no choice but to follow suit. If your home loan provider does not cut rates as expected, switch to a bank with a lower rate. You will have to do the paperwork (applying for a new loan and foreclosing the existing one) but the savings in EMI will be enormous. A customer with a Rs50 lakh loan for 25 years will save more than Rs3,000 every month if his EMI is lowered from 9.15% to 8.25%.

January 2, 2017 / by / in , , , , , , , ,