Bankers watch while buyers wait

That the real estate boom has to take a back seat thanks to the topsy-turvy state of economy is quite evident in the market. However, with interest rates on home loans being relaxed by most of the banks owing to ‘Repo’ rate cut, number of loans taken since the announcement has almost remained stagnant.

With borrowers heaving a sigh of relief owing to the 0.75 per cent reduction in the benchmark Primary Lending Rate (PLR) that most of the banks have adhered to, bankers are seeing it as a good move on the part of the government.

“It’s definitely a good strategic move because a slash in interest rates is always welcome by those investing in apartments who mostly comprise the middle class. This should bring in some stability to the demand as well,” says Noel D’Silva, relationship manager of the Vikrampuri branch of the .State Bank of Hyderabad (SBH).
Ray of hope

However, given the current scenario in real estate, most of those who have invested in property in the past few weeks through home loans have withdrawn from the purchase.

But builders are positive that this trend may soon change. “We have seen quiet a number of young professionals who have taken back the booking amount after the markets turned volatile. At present, there are very less buyers in twin cities due to the prevailing market situation. But due to the revised interest rates, the number of investors may grow in the coming days,” says an optimistic official from a construction company.

As per the new revised home loans, the floating interest rates of State Bank of India for loans taken up to Rs. 30 lakh with a repayment period of up to five years is 9.75 per cent.

For a repayment period of five to 15 years on the same amount it is 10 per cent and that of 15 to 25 years, it is 10.25 per cent.

Under the fixed rates, for loans taken up to Rs. 30 lakh, the rate of interest is 12 per cent and loans taken above Rs. 30 lakh will have to be repaid with an interest of 13 per cent.
BoI rates

Moreover, the Bank of India too released a list of revised interest rates on home loans where in a loan of up to Rs.30 lakh that is being paid within five years, the rate of interest is 8.75 per cent.

The same loan with a repayment period of five to 10 years is 9 per cent, while for between 10 and 15 years, the rate of interest is 9.25 per cent.

Even though prices of apartments in the past few weeks have gone down, buyers have been holding back their decision to go ahead with the purchase.

“Prospective buyers are waiting for prices of construction materials to drop further and are keeping a tab on market trends,” opines Mr. D’Silva.

“The movement of markets during the past few months have made them indecisive about investing in property. We will have to wait and watch for sometime to see how people have taken to the slashed interest rates,” he further adds.