India sees a rise in demand for home loans by 26% and loan against property in January-June.

The decision made by the Reserve Bank of India to keep the repo rate unchanged at a constant 4% has resulted in soaring demand for home loans in India.

The demand for Loan Against Property (LAP) has also spiked around the same time by 20%. And with the increasing trend of Work From Home, more buyers are opting for Home Loans. 

The recent data also revealed that the home loan borrowers are benefitted from the ongoing record-low interest rate on home loans, as specified by the 42% on-year surge in demand for Balance Transfer (BT). Significant inflation of 26% in demand for home loans in the first half of 2021. 

Furthermore, the major reason behind the ongoing rise in Loan Against Property (LAP) is recognized to be the Reserve Bank of India’s decision not to change the repo rate and to keep it at a constant 4%. These factors have resulted in a remarkable rise of 20% in Loan Against Property.

This move of RBI has liberated many banks to offer home loans at interest rates as low as 7% and has left room for more home loan borrowers to apply for home loans at ease. 

Upcoming aspects of increasing home loan demand

The new normalized trend of Work From Home (WFH) is another aspect of the increasing home loan demand, which has prompted buyers to look for spacious and upgraded configured houses. This surge in demand for homes has been observed in the mid and above segments. 

The latest data extracted from Home Loan consumers reveals that the tier-1 cities in India have incessantly searched and demanded an amount of Rs. 36 Lakh for a home loan. Whereas the most common Balance Transfer (BT) amount is Rs. 26 Lakh and Loan Against Property (LAP) Rs. 32 Lakh. On the other hand, the home loan amount for Tier-2 cities was Rs. 26 Lakh, Rs. 23 Lakh for LAP, and Rs. 18 Lakh for BT. 

What’re others saying about this?

During the Pandemic, the rising demand for home loans is in line with the increasing demand for residential real estate across key markets of India. The initiatives taken by the government such as, keeping the repo rate unchanged at a constant 4%, and reducing the stamp duty rates, are some of the steps on the right track. These steps have been contributory in motivating the consumer sentiment and have resulted in an estimated 50% of borrowers opting for home loans of less than 15 years tenures. 

The administration is anticipating the stifled demand to soon translate into profiting sales; the factors that are likely to back the sales are low-interest rates, stable prices, and attractive payment plans. 

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