Sunday, December 18, 2016

4 Recent Trends in the Indian Home Loan Sector

Purchasing a new home may be a difficult task. There are many aspects to be taken into consideration while buying a house, the main factor being finance. As the cost of real estate is high, it often becomes difficult to buy a house with accumulated savings. However, with a large number of home loan financiers in the market today, owning a home has now become an achievable dream.

Home Loan

The home loan market has come a long way from what it was to what it is today. Following are the four recent emerging trends in the Indian home loan industry.

1.Greater competition

The last few years have witnessed a surge in the number of home loan borrowers. Sensing an opportunity, there has been a rapid increase in the number of home loan lenders. Due to this, the competition has increased manifold. Thus, lenders now offer numerous schemes to expand their customer base. Therefore, if you intend to buy property in India, you may now gain access to more prompt and flexible services.

2.Technology-driven services

With advancement in technology, home loan services are not as cumbersome as they used to be. Earlier, borrowers would have to visit the branch to obtain information about loan required to buy a property. Nowadays, online portals have made it easier to find out loan-related information, calculate monthly repayment amount, and check loan eligibility. Besides, you may also apply for a loan online and view your repayment schedule through the lender’s website.

3.Reduced interest rates

While the interest rates for home loans were high in the past, today these rates have dropped substantially. In 2015, the average interest rate of home loans was about 9.94% in comparison to higher interest rates charged after the year 2008.The Reserve Bank of India (RBI) cut its repo rate by 25 basis points at the beginning of 2015. Repo rate is the rate at which RBI lends money to financial institutions. With the cut in this rate, lenders are expected to lower their rates of interest on home loans. This is certainly beneficial if you are seeking to buy a property in India.

4.Rise in borrowers from small cities

While the top 10 cities in India have been largely contributing towards India’s home loan market, the borrowing patterns of smaller cities and towns, including Tier-2 and Tier-3 cities, have also gained momentum.  Major Public Sector Undertakings (PSUs) and some leading private banks have noted a strong demand for home loans from smaller cities. This is due to the affordability, connectivity, and increasing employment opportunities.

The Prime Minister of India, Mr. Narendra Modi, has the vision to provide housing for all by the year 2022. Moreover, the demand for housing units in India will continue to witness an increase due to rising income levels, lower home loan interest rates, increasing urbanization, and easier capital regulations for loans. With the easy availability of loans and numerous other benefits offered by lenders, you may conveniently purchase a property in India.


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