Following the current trend of reducing interest rate on home loan, Axis Bank truncated its current interest rate by 30 basis points (or 0.3 per cent) on Thursday. The new rates which are effective from 16 May reduces the home loan rate to 8.35 per cent. The new rate is applicable for home loans under 30 lakh by salaried borrowers.
Earlier, the State Bank of India (SBI), Housing Development Finance Corporation Ltd (HDFC) and Industrial Credit and Investment Corporation of India (ICICI) have also cut down on their home loan interest rates.
“There is a large, genuine and mostly unmet need for affordable housing,” Axis Bank’s executive director Rajiv Anand told PTI. He also added that the rate cuts will help more people fulfill their dream of having a home.
The moves by different banks come at a time when banks are witnessing a surge in household loans and a dip in corporate loans. This is sure to boost the demand in the real estate sector. Home loan interest rates become even more relevant for the value or budget home buyer, as every rupee reduction in EMI can propel a purchase decision forward for middle income and lower middle income buyers.
However, this surely is not enough to boost the real estate sector. The real estate developers are looking for intervention of the government.
Amit Raj of Earth Infrastructure told Businessworld, “The government needs to give us the status of industry and not just a sector, and the home loan rates should be relieved not only for salaried class but also for elite class so that corporate investment increases in the sector. Only then, we can see some improvement in the sector.”
After demonetization, the banks saw an increase in the deposits. Thus, it has become more conducive for banks to lend loans at low interest rates.
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