The Much RATED New Year

With the country’s economy blossoming for the first three quarters, a sudden jolt was received in the form of Demonetisation which many termed might end up hampering the economy but they missed to see the bigger picture behind it. Demonetisation was indeed targeted at uprooting the parallel economy which was running in the country and hampering its anticipated growth but many failed to realise what this move will do towards boosting the current economy of the country which was very much dependent on cash transactions. The cash rich economy was suddenly looking at a cashless version of its and this move was sure to provide the much required liquidity to the banks. This liquidity would in turn end the fund crunch with many banks and a surplus always means easier terms of disbursement. Key ministries had also indicated that lending rates would come down post the demonetisation phase was over and exactly the same happened. With the first day of the New Year, banks started announcing cuts in their lending rates basis their reduced MCLRs.

Several leading banks in India have cut down tremendously on the lending rates. For instance, State Bank of India (SBI), reduced its marginal cost of funds based lending rates (MCLR). For SBI, the new rates are 8 percent against 8.90 percent for one year loans, 8.10 percent and 8.15 percent respectively for two year and three year maturity. For other few banks, one year MCLR stand at 8.45 percent against 9.15 percent for Punjab National Bank (PNB), 8.65 percent against 9.30 percent for Union Bank of India (UBI) and 9.15 percent against 9.30 percent for IDBI Bank. Consequently, home loan borrowing has also come down drastically, signalling a boost to housing demand for near future. For example, women borrowers of SBI an avail home loan at 8.60 percent and 8.65 percent for others, thereby saving a decent amount on the EMIs.

Voicing his opinion on the same, Avneesh Sood, Director, Eros Group says, “This is just the beginning of what is going to be a fantastic year ahead for the real estate sector. RERA has already been notified which in itself has boosted the sentiments of home buyers by a lot. Prices are surely not going to see any downward trend as was expected post demonetisation because the primary market was immune from cash transactions, enabling them to survive the phase. The only missing piece in the puzzle was of reduced lending rates and with key banks already cutting down heavily and others destined to follow soon, the common Indian home buyer is looking at the real estate market with a whole new perspective. They can see themselves a step closer to the dream of owning a roof.”

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