Diwali season home loan trends: What to expect this year

livemint.com:

home loan and real estate industries see the festive season as a potential opportunity to increase their sales by attracting customers. A recent report by real estate advisory company Palladian Partners shows there was a 32% jump in bookings in Mumbai in September 2023 year-on-year (YoY) while stamp revenue rose 53 per cent during the same period. Anarock Group’s data for September showed a jump of 29% YoY in new bookings in Bengaluru.

These figures represent demand for homes ahead of the festive season. A higher surge can be expected as the season has set in now. With the Reserve Bank of India not increasing the repo rate since February, the Indian economy gaining strength, and consumers' purchasing power getting better, it was all a positive signal to the home loan industry and real estate companies.

So how does the home loan industry lure in customers during the season? By reducing the home loan interest rate; by waiving the processing fee; and/or by waiving EMIs and loan prepayment charges. Since home loans are high in amount and have a long duration, the borrowers pay a hefty amount in interest. They always look for ways to save some money on the repayment.

If a lender reduces the home loan interest rate by 0.5% or 1%, a borrower can save huge money on the overall loan repayment. For instance, on a home loan of ₹80 lakh for 20 years at an interest rate of 10%, a borrower has to pay the EMI of ₹77,202. While they have to pay the interest of ₹1.05 crore on the ₹80 lakh principal amount, the total repayment amount will be ₹1.85 crore.