HYDERABAD: The Confederation of Real Estate Developers’ Associations of India has appealed to the Reserve Bank of India to reduce the home loan interest rates.
The RBI, in its fourth bi-monthly monetary policy announced on Tuesday, kept key rates unchanged. A revision of rates is expected to spur the demand for housing which has been witnessing a subdued growth for some time. Currently, the interest rates range between 10.15 and 11.45 per cent for home loans in the country.
“The real estate sector has been hit by high costs of land, labour, material, funds and high rates of taxation along with moderate demand in the last few months,” said C Shekar Reddy, Credai president. He said the industry was looking forward to a reduction in interest rates and improved liquidity to usher in growth.
As per estimates, the housing sector requires capital investment of about $1.2 trillion. Emphasising the need to make home loan rates independent of inflation, Reddy said such a forumla would enable to achieve the government’s mission of providing housing to all by 2022.
“Developers are looking for a roadmap for utilisation of the funds allocated to trigger the demand and growth in the real estate sector. Clarity in policy along with a lowering of the cost of borrowing will help developers firm up their plans to bridge the housing shortfall of 18.7 million units in urban areas and gear up to meet the expected demand for 69 million homes by 2030,” Reddy said.
Recently, the apex bank has allowed banks to issue long-term bonds with a minimum maturity of seven years to raise funds for affordable housing projects and treat loans under the priority sector lending for affordable housing and home loans to individuals up to `50 lakh for houses worth `65 lakh in six metros and `40 lakh for houses worth `50 lakh in other locations.
“These initiatives along with the increased limits for tax deduction under Sections 80C and 24(b) of the Income Tax Act have enthused people to acquire residential property. However, lending rates are still high and limit the eligibility of customers,” he said.