HYDERABAD: The decision of the Reserve Bank of India to keep the policy rates unchanged has dashed the hopes of realtors and home buyers alike in the state.
When the Centre announced several sops and relaxations for housing in the 2016-17 budget, the sector believed that banks would slash the interest rates on home loans to lift it from the crisis.
But much to the disappointment of realtors, builders and home buyers, banks have refrained from cutting home loan interest rates.
“Banks are charging 9.50 pc or more interest on home loans. People will be motivated to buy homes if the loan interest rates are lowered. All our representations to banks to cut the interests rates to give a fillip to the struggling housing sector have gone in vain.
Whenever we approached the banks earlier, they said they would think of reducing interest rates if RBI did so with its policy rates,” said C Shekar Reddy, ex-president and national executive member of the Confederation of Real Estate Developers’ Association of India (CREDAI).
With RBI keeping the policy rates unchanged, banks are expected to keep the loan interest rates unchanged.
This has made the sector severely disappointed and it will take much longer time for it to come back on the rails. The residential property market has not been doing well and it was hoped that a cut in policy rates by RBI would give it a boost.
The Union budget provided an additional deduction of ` 50,000 on interest on home loans up to ` 35 lakh and on houses costing not more than ` 50 lakh. For developers of affordable housing projects, it gave a 100 pc tax deduction in the case of homes spread over 30 sq mts in the four metro cities and over 60 sq mts in Tier-II cities in the country.
“The RBI governor clarified that the key policy rates were kept unchanged in order to control inflation.
Though it is a right move from the economy point of view, we request banks to cut interest on home loans as it will help not only the housing sector but also ancillary sectors,” said Dasarath Reddy, president of Telangana Real Estate Developers Association (TREDA).
