Overall decline of 60 bps in interest rates in 2020 across lending institutions, a study by Propstack said
The general slowdown in the market, the non-banking financial companies (NBFC) crisis last year, and the COVID-19 pandemic this year, brought down the number of loans sanctioned to real estate developers by 43 percent on a year-on-year basis.
For the nine-month period in 2020, the decline in real estate wholesale lending for both residential and commercial real estate projects was down by almost 35 percent, a study by Propstack, a data analytics firm has said.
The number of loans sanctioned in 2019-2020 stood at 641 for an amount of around Rs 1.27 lakh crore and those for the nine-month period this year stood at 366, worth 78,315 crore, the study said.
There is a 35 percent pick up in the number of loans sanctioned to developers in the third quarter this year on the back of lower interest rates and stamp duty reduction, not to mention the offers doled out by developers during the festive season, it said.
“The number is likely to go up at the end of the fourth quarter as sales have improved thereby improving lending,” Sandeep Reddy, Co-founder at Propstack, told Moneycontrol.
Also, there is an overall decline of 60 bps in interest rates in 2020 across lending institutions. For developer loans borrowed from banks, the dip was .1 percent; for those borrowed from housing finance companies (HFCs), the reduction was .4 percent; and for those lent by NBFCs, the reduction in rate was 1.2 percent, the study said.
“This means that the sharpest reduction was by NBFCs and the least reduction was for loans borrowed from banks,” Reddy said.
The study also noted that there was a decline of -1 percent in interest rates for term loans or construction finance. It was down by .8 percent on loans taken through debentures (early stage finance) and .5 percent through lease rental discounting. The overall decline of .6 percent, it added.
In another report released before the festive season, Propstack had said despite the COVID-19 pandemic, real estate sales in Mumbai have grown by almost 35 percent year-on-year in October, indicating the massive pent-up demand among end-users to buy property and clearly suggesting that the state government's decision to reduce stamp duty is finally showing results.
The number of registrations in February 2020, just before the lockdown, was 5,927. In March the number dwindled to 3,798 and was zero in April. When the registration offices reopened in May, the number of registrations gradually climbed to 207, rising to 1,839 in June, 2,662 in July and August, and 5,597 in September. The number has touched 7,929 in October due to the festive season and the discounts available in the market, it had said.
A report by Knight Frank had also noted that Mumbai's home sales volume rose 42 percent from last month to 7,929 units in October 2020, the highest in last eight years, on account of stamp duty cut and the festive period of Navratri and Dussehra. The registrations in October jumped 36 percent year-on-year (YoY).