Is it a good time to take out a home loan?

The past two years have been an outlier for the mortgage industry, with interest rates hovering at record lows of under 7 percent.

Nalin Jain, Chief Customer Officer and Head of Operations at Godrej Capital, says: “Low property prices and stamp duty reductions combined with lifestyle changes caused by the pandemic have further accelerated the development of the sector. But given the current macroeconomic landscape and inflation concerns, the upward move in interest rates was imminent.”

While the move could briefly dampen buyer sentiment, industry experts say it’s still a good time for homebuyers to take advantage of low home prices.

Here are some of the reasons why:

On the home loan front, “despite the rise in interest rates and house prices, we live in a very low interest rate environment compared to pre-pandemic times. While interest rates may seem high with initial rates around 7 percent, historically they have been much higher,” says Jain.

Now, applying for a loan can help you buy a home before home equity gets even more expensive. Note that many home finance companies today offer innovative, flexible repayment options such as EMI adjustment and longer terms to improve affordability.

Jain points out, “The continued increase in raw material costs has pushed up real estate prices from a residential real estate perspective. However, these rates are expected to reverse once the global supply chain is restored. Many developers can offer homebuyers discounts to sell their inventory and increase their cash flow to offset the current premium.”

Additionally, experts say incentives like exemption from stamp duty and registration fee may also be a silver lining for fence-sitting homebuyers. Additionally, Jain says, “improved job prospects, improved salary structures, and tax breaks on home loans could keep consumer sentiment positive.”

In short, it is believed that a rate hike cannot be the only reason why a homebuyer should not take out home financing. In fact, given the macroeconomic trends, home buying is highly recommended for those looking for a residential property for a personal dwelling,” adds Jain.

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