Housing For All – Financing & Reduced Home loan rates for Affordable Housing
The three basic needs of human are food, clothing and shelter. Shelter is a prime necessity to ensure basic standards of living. To help people, especially those who can’t afford to get their dream home, the Indian Government has taken significant steps by launching a scheme called the Pradhan Mantri Awas Yojna (PMAY). In 2015, the NDA government had started a housing solution with an aim of ‘Housing For All’ (HFA) by the year 2022. Due to such schemes, India’s banks are focusing on affordable housing to take advantage of incentives offered by government to buyers.
In the affordable housing push, India’s largest lender – The State Bank of India, SBI, has reduced rates on home loans of up to 30 Lakh by 25 basis points for new borrowers to achieve the goal of HFA. It is the second time that SBI has cut down home loan rates in 2017; the rate is now reduced from 8.60% to 8.35% for new borrowers. For loans ranging from Rs 30 Lakh to Rs 75 Lakh, SBI has slashed rates by 10 basis points. Recently, SBI tied up with the Confederation of Real Estate Developers’ Associations of India to offer concessional loans for affordable housing projects after the association launched 375 affordable housing projects across India. As per the statement by SBI, “eligible home loan customers can avail of an interest subsidy of Rs2.67 lakh under the Pradhan Mantri Awas Yojana scheme.” It also said that it had come out with special offerings for construction finance to builders of affordable homes. According surveys conducted, India has a housing shortage of over 62.5 million units. In 2017’s budget, the government gave infrastructure status to affordable housing in order to enhance funding access and increase investment. This increased budget allocation for housing was Rs 23,000 crore for rural housing and urban housing allocation was 22% higher at Rs 6,000 crore. According to Crisil Ratings, the number of housing finance companies raised from 55 in fiscal 2014 to 70 in fiscal 2016. Additionally, around 80 licenses are pending with National Housing Bank.