Click to play videoNew Delhi: Public Sector Unit (PSU) banks cut interest rates on home loans below Rs 20 lakh after much prodding by the Reserve Bank of India (RBI).
But the cut in rates may not help many customers as most builders say they are not planning to build homes below Rs 20 lakh in the metros.
So the interest rate cut has been given thumbs down by major real estate players.
"The rate cut is not going to help us. At present, we are not building houses priced around Rs 20 lakh. And who has the money to purchase cheaper land now to start new project for cheaper homes," says SK Bansal, Director Finance, Omaxe.
More than 80 per cent of customers in India take home loans below Rs 20 lakh in the tier II and tier III cities.
So this segment stands to gain the most from the rate cut.
Real estate experts say there are very few homes in the Rs 5 to Rs 20 lakh price range in metros.
So prospective buyers in metros will have to wait for banks to cut rates across the board or for property prices to plunge to be able to afford a new house.
"Almost 55-60 per cent of the mortgaged property is in top seven cities (metros). So to make a real impact government needs to do much more for the above 20 lakh loan segment," says Hardeep Dayal, Real Estate Analyst, Centrum Research.
With prices surging over three times in the metros, the government move seems aimed at the Rs 25-30 lakh homes in tier II cities.
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