By Vipin Agnihotri
The people of India wait with bated breath for home loan interest rates to fall. There is no doubt that the average Indian dream of owning his own home is stronger then compared to other impulses.
It is correct that interest rates have never been higher. It is equally correct that there is little likelihood of them falling significantly in the near future. Moreover, the magnitude of property prices in cities such as Mumbai and Delhi compound the difficulty of the situation.
The present wait and watch game large chunk of buyers are playing is mainly based on two factors. First and foremost, home loan interest rates will soon fall and secondly there will be a correction in the property market and property rates will come down.
All in all, the average Indian has put his dream for a home on indefinite hold, assuming that lower property prices and minimized interest rates are just around the corner. In my opinion, this is not a reasonable stance to take because there is no likelihood of property rates in Mumbai, Pune and saturated cities such as Delhi and Bangalore coming down. If experts are to be believed, the demand is huge and the supply nowhere matches it. “It is a seller’s market and will remain one- at least for the short to mid term,” pointed out Kadam Khan,” real estate expert.
Another important factor is that people tend to misunderstand the dynamics involved in lending rates. Point to be noted here is that government cannot arbitrarily lower rates, since they are attached to the global value of benchmark commodities such as oil. The pressures that the Reserve bank of India is subject to are inflexible.
That is where it makes little sense to wait for home loan interest rates to ease before investing in something as important as a home for genuine self-occupancy. In my opinion, it is highly unlikely that interest rates will ease in the foreseeable future. Consider along with the fact that property rates will not drop either, it is crystal clear that the best time to buy one’s first home is now.
Furthermore, it is worthwhile to note that despite the soaring interest rates on home loans, buying a property is still among the safest investments available at the moment.
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