MUMBAI, 11 FEBRUARY, 2016: On 29 February 2016, when the Hon’ble Finance Minister Shri Arun Jaitley makes his Budget proposals speech, the hopes and aspirations of home seekers will be that the Union Budget would enable home loan interest rates becoming affordable. “The Budget and its impact on home loan interest rates is among the issues which the real estate industry will watch very closely on 29 February 2016. Perception among home seekers at present is that currently, banks and Home Finance Companies (HFCs) are offering interest rates which appear to be on the higher side. Across Mumbai, suburbs and the Mumbai Metropolitan Region (MMR) as also the state of Maharashtra, among the high expectations which real estate stakeholders have from the upcoming financial budget 2016-17, is that lower interest rate home loans will provide much-needed relief to the home seekers,” said Niranjan Hiranandani, MD, Hiranandani Communities and Founder-President National Real Estate Development Council (NAREDCO – Maharashtra).
Prime Minister Narendra Modi has spoken about the initiative, Housing For All Indians by 2022’. It is a laudable initiative, but would appear to be difficult to achieve unless home loans become affordable to all, said Niranjan Hiranandani. “During the previous NDA Government under the then Prime Minister Shri Atal Bihari Vajpayee, home loan interest rates had come down to historic lows. This was one of the main reasons why a large number of home seekers could buy their homes. In the Budget Proposals for 2016-17, I hope the Hon’ble Finance Minister Shri Arun Jaitley effectively brings down the interest rate on home loans – 7.5 per cent to 8.5 per cent would constitute a good spread,” he added.
There is also the aspect of transmission of rate cuts to end users i.e. home loan takers, on part of banks. “Hopefully, the Budget proposals will have positive indications. Home buyer sentiment is expected to continue with the positive trend it has exhibited since festive season 2015, going into 2016, on the premise that the RBI’s rate cuts, once fully transmitted by banks to home loan takers, will add to the positive sentiment,” he added.
Apart from this aspect, home loan interest amount exemption under Income Tax benefit should be increased from the existing limit, said Niranjan Hiranandani.
Given the perception that interest rates on home loans are ‘very high’, many a home seeker has turned into a ‘fence sitter’, as paying a high interest component in the EMI impacts home budgets. Over the past few months, ‘fence sitters’ have grown – and the right points in the Budget can help change this, said Niranjan Hiranandani.
The positive sentiment witnessed in real estate, especially in terms of commercial real estate right from the first half of the year and residential real estate from the beginning of the festive season in 2015 suggests that 2016 will be a positive year. Real estate stakeholders have high expectations from the upcoming financial budget 2016-17, and I hope the Budget proposals on 29 February will see the Hon’ble Finance Minister Shri Arun Jaitley having good news for all stake holders in real estate,” concluded Niranjan Hiranandani.