Increasing competition in the home loan sector ensures that consumers can still make a buying decision despite rising interest rates.
Home loans are due to go up that is the general wisdom gleaned from e x p e r t s.T h e Reserve Bank of India (RBI) has increased interest rates seven times in 2010 aggregating 300 basis points.However,there has been a relatively muted 150 basis points increase in home loan interest rates,but the latest increase will put upward pressure on home loan interest rates,given that the bank and housing finance companies have very little wiggle room left.
Nonetheless,the demand for home loans will continue to be strong,if property prices stay stable.Besides,with the increasing number of housing finance companies and banks that are in the fray,the buyer has a wider choice and can opt for the best deal.
On account of various factors influencing the industry,such as increased urbanisation,favourable demographics,rising levels of disposable income,government tax incentives and improved levels of housing construction activity,the housing finance industry in India has definitely seen an uptake.Several banks and housing finance companies (HFCs) include the cost of registration,stamp duty,society charges and other associated costs while sanctioning loans to differentiate and make home loan products more attractive.Also,housing financial institutions are resorting to offering free addons such as life insurance,credit cards and consumer loans at reduced rates for furnishing homes in addition to tailor-made loan schemes to renovate,repair,extend,convert or otherwise improve ones home.Consumers are also benefiting from the numerous property fairs and expos being organised by various lending institutions and also through counselling and legal advisory services being extended on matters pertaining to property titles,evaluation,pricing.
Sachin Sandhir,Managing Director and Country Head,Royal Institution of Chartered Surveyors (RICS) India,says,This has been more visible in the post-reform period,where there has been appreciable growth in housing finance through several intermediaries such as commercial banks (CBs),housing finance companies (HCFs),and apex co-operative housing federations (ACHFs).From the buyers perspective,the increased number of players has boosted competition subsequently giving rise to a buyers market,where the customer now has choice and bargaining power and is in a position to demand quality service in the wake of the housing finance industry increasingly being commoditised.
