Loan rates slashed, should you buy a home now?

Sarbajeet K SenMoneycontrolThe housing sector is set to get boost with a host of lenders, including the likes of State Bank of India(SBI), Punjab National Bank (PNB) and Union Bank of India, reducing their lending rates to push loan offtake.But is this a good time for you to go in for purchasing the house on a home loan? Experts believe if you are looking for a home, this could be a good time to take a housing loan and seal the home deal.“This is a very good time for a home purchase. With banks flush with funds post demonetisation, there is an extra focus on lending. The interest rates are at the lowest in the last 6 years. So this is a good time to go ahead with the property purchases,” Adhil Shetty, CEO, Bankbazaar.com told Moneycontrol.He pointed out the marginal cost of funds based lending rate (MCLR) based system ensures that any future cuts are transmitted to the borrowers. So even if interest rates are cut in the future, borrowers will be able to get the benefits of the rate cuts. “We believe that there is potential for the RBI to reduce repo rates by at least 25 basis points in the next couple of bi-monthly policy reviews. If this happens, the interest rates could fall further,” Shetty said.He felt that the slump in the real estate sector is also likely to provide a good deal for home buyers. “There is plenty of unsold inventory and demonetisation process has further cooled down the real estate market. This puts more pressure on developers to sell, meaning buyers can look for some great deals. Also, the Real Estate Regulatory Act would further empower buyers,” Shetty said.Cut in interest rates is likely to give a big push in offtake feels Vijay Agrawal, Executive Director, Equirus Capital. “Reduction in home loan EMI will increase purchasing capacity of home buyers. It is expected that 1 per cent reduction in home loan rate will increase purchasing capacity by around Rs 10 lakh, which will in turn increase buying capacity of home buyers. New housing demand will be created due to increase in buying capacity of buyers as well as low interest rates that are likely to prevail for some time,” says Agrawal.He feels that housing demand will pick up soon. “The second half of 2017 will again see a revival in home demand once the dust caused by demonetisation settles,” Agrawal said.Sunil Mishra, Chief Business Officer, Primary Sales, PropTiger.com, feels that housing offtake could pick up in a couple of months if prices soften slightly more. “If prices fall by another 10-20 per cent in major markets, people will wait till January/February to be assured that prices are not going to fall further. After that, there will be a boom in real estate sales as people have been waiting for the past three years to buy their dream home at the right prices.”