The government is believed to be eyeing proceeds from the demonetisation drive to boost an already crippled housing market. Sources tell ET Now that senior cabinet ministers are in favour of using the money earned from demonetisation to announce a housing scheme that would provide significant discounts to prevailing home loan rates. Sources add the government is keen to launch the scheme with cheaper home loan rates of 6-7% versus today’s average of more than 9%.
These lower home loan rates could be for first time home buyers buying a house for the first time, and for a loan of up to Rs 50 lakh.
This is all at an early stage, and the final contours will only be decided once the government has assessed the full fiscal impact of demonetisation. Senior government officials though concede that the scheme will be successful only if the home loan rates are significantly discounted.
The new housing scheme may also find its way into the Union Budget that Finance Minister Arun Jaitley will present on February 1, 2017.
The idea behind cheaper home loan rates is to make housing affordable, lure back buyers, and at the same time rescue builders that are grappling with massive unsold inventory.
Rajeev Talwar, CEO, DLF told ET Now that while such a scheme would definitely help revive the housing market, it would be more beneficial if the government could offer lower home loan rates for up to Rs 1 cr and not just Rs 50 lakh. he believes this is what is needed to tunraround the housing sector in the metros and bigger cities.