Reduced Home Loan Interest Rates to Benefit Buyers in Mumbai's Outskirts and Beyond
Homebuyers searching for apartments on the periphery of Mumbai, Nashik, and Pune stand to gain the most from public sector banks' recent interest rate reductions. These cuts will make homeownership more accessible to a wider range of potential buyers in these areas.
Public sector banks declared on Monday that home loans up to Rs 5 lakh will carry a maximum interest rate of 8.5%, while loans between Rs 5 lakh and Rs 20 lakh will be available at 9.25%. This move is anticipated to stimulate the housing market, especially in the affordable housing segment.
Impact on Mumbai's Housing Market
"The Mumbai market will not be affected by this decision as no flat in the city is below Rs 20 lakh. For larger metros, the limit should have been set at Rs 50 lakh," commented Boman Irani, Rustomjee Group's chairman. The Rustomjee Group is currently developing middle-income housing projects in Virar and Thane. Irani points out that over half of the home loans disbursed by banks are for properties under Rs 20 lakh, indicating the significance of this segment nationwide. He believes the impact would have been amplified if housing projects within the major metropolitan areas had also benefited.
Expert Opinions on the Impact of the Rate Cuts
Anshuman Magazine, chairman & managing director of CB Richard Ellis, South Asia, noted, "This shows some effort by the government to support the housing market. Although this is expected to have some impact on the market, it won’t be a significant one as the overall confidence level of consumers to invest has to improve.” He further elaborated that a more substantial impact would have required increasing the loan limit to Rs 40 lakh. He states that the prevailing market sentiment is subdued, with consumers exercising caution and awaiting price corrections.
Mumbai-based developer Pujit Agarwal observed that the focus of most developers during the recent market boom shifted away from the lower income group towards high-value properties. He anticipates that the interest rate cuts will encourage developers to reconsider and re-engage with the affordable housing segment, and they are already revisiting their plans to incorporate smaller apartment units.
Impact on Affordability and Specific Locations
Pravin Doshi, chairman of Maharashtra Chamber of Housing Industry (MCHI), emphasized that high interest rates made EMIs increasingly unaffordable and believes this decision will alleviate that burden. He predicts the move will benefit consumers in areas like Dahisar, Mira Road, and Virar, but not bring significant changes to Mumbai proper.
Pravin Banavalikar, CEO of Tanaji Malusare City, which is undertaking a low-cost housing project in Karjat, perceives the interest rate reductions as a major positive development. "We are constructing flats costing between Rs 2 lakh and Rs 7.5 lakh. This comes as a big relief for clients in the lower income group," Banavalikar shares.