After demonetization, Year 2017 will bring lot of transparency and home buyers confidence due to government rules on RERA Development Act, Benami transaction holders, and banks reduce interest rates that will effect into improvement in real estate market. Due to demonetization, Real estate sales have slowed down. In the long term property prices will not drop down to 20% to 30% rather it will increase. Surely, 2017 will see a boon with a major turn up.
Home buyers will have a big help as housing loan interest rate likely to come down to 7%. Just Sate Bank of India and many other national banks declared cut in lending rates. SBI announced reduction in benchmark lending rate by up to 0.9 per cent. Home loan interest rates have dropped to their lowest level in six years cutting the effective rate to 8.6% from 9.10%. Such reduction will attract more home buyers in 2017.
Every people desires for owning a property for family. Owning a home is the basic motto of every human behind his earning in India. This time population is on growing. The need for land is in great demand with this increasing population. Housing units are being unavailable and increasing gradually quarter by quarter that it speaks about the strength or progressive moment of real estate market of 2016 which clears the image of 2017 that occupancy of houses will increase in this year.
These changes have helped people to gain more trust and transparency and 2017 will be good year for real estate sector and home buyers.
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%.