New Delhi: India’s biggest banks and home builders are offering decade-low interest rates and discounts to ramp up demand ahead of the festival season.
In anticipation that consumers will ease their purse strings during the three-month period, lenders including State Bank of India, Housing Development Finance Corp., Kotak Mahindra Bank Ltd. have slashed home loan rates by 15-60 basis points to between 6.5% and 6.7% — the lowest level in a decade.
Lenders are hoping to capture a relatively-safe set of borrowers as the lingering impact of the pandemic continues to threaten asset quality for many banks. The drop in rates has been helped by a massive amount of cash after the Reserve Bank of India injected billions of dollars to protect growth.
Builders are offering discounts and gifts for home buyers, deferring payment plans and foregoing charges to tap a nascent revival in the property market. They join a slew of Indian companies — from consumer durable manufacturers to auto makers — slashing prices to bolster demand during the festive season. Walmart-backed e-commerce giant Flipkart has discounts of as much as 80% on some electronics as part of a big billion sale.
Given stable home prices and a market filled with festive season offers “the reduced home loan rate announcements are appropriately timed and will give the right fillip to residential sales,” according to Samantak Das, chief economist and head of research at property research firm Jones Lang LaSalle Inc.
That view is underpinned by a recent JLL survey of six top Indian cities that predicted more than 80% of 2500 respondents plan to buy a house within the next three months.
Das expects festive offers to boost home sales by 30-35% in the second half of the year compared with the first six months.
Adhidev Chattopadhyay, an equity research analyst with ICICI Securities, expects “developers to post record sales booking numbers in second half of fiscal 2022 led by new launches,” he said in a note.-Bloomberg