Even though India's economic situation was not favourable throughout FY20, the market situation seems to be recovering with new developments in the real estate sector. The home loan in India achieved substantial growth and will further witness a CAGR of 22% during 2021-2026.
Some recent changes in this particular segment, like reduced interest rates, the introduction of loan moratorium, etc., have helped the industry to accomplish such encouraging growth.
Following are some key factors that are driving the home loan market:
Repo rate slash: Even though the economic turmoil was affecting established businesses, the price stability made the real estate sector a great investment opportunity. On top of that, RBI's repo rate cut came as a great aid for borrowers who were trying to avail a home loan low interest rate. With interest rates brought down to a record 7%, the growth in this particular segment was inevitable.
Rising disposable income: The increasing awareness regarding financially-stable life has made individuals realise the value of home ownership. With RBI's monetary measures, the extension of the EMI moratorium period, etc., more individuals are now making use of their disposable income and opting for home loans.
However, one must follow the basic home loan eligibility parameters to enjoy easy approval and obtain a sizeable amount to invest in real estate.
Affordable housing schemes: Arrival of Government-backed home loan schemes have also been beneficial for the industry. Credit linked interest subsidy with schemes like PMAY made it easier for borrowers to handle the monthly instalments and manage other liabilities altogether.
Several pre-approved offers launched by housing finance institutions and introduction of lucrative schemes against home loan low interest rates have also bolstered this growth. This has further allowed borrowers to opt for home loans to fund the purchase of their dream home.
