Few decades back, buying a home was not a very easy task as there were hardly any lenders available to loan the ever increasing astronomical lump sum of money. However, with time, the rising property prices and the burgeoning housing finance market in the country, made the phenomenon of the home loans easy and the dream of buying a home possible. Also, the HFC’s (Housing Finance Companies) and banks have come up with so many home loan plans that they have become an answer to every customer’s necessity. Apart from this, the changing equation of market has also provided customers with several reasons to opt for a home loan. Here are few reasons to why home loans have gradually became a necessity in the society.
The need for home loans arises not because property prices are heading upwards all the time but because home loans make great sense from a long-term savings perspective. Not only are home loans a handy tool for the common man to own a roof over his head but they also help save money in the long run.
With skyrocketing real estate prices, people are increasingly opting for housing loans to acquire their dream home. Interest rates are coming down all the time and the housing finance companies are literally falling over each other to lure the prospective home-seekers.
Like all other commercial banks PNB is also having home loans in their portfolio. Frequent changes in regulation made by central bank affect the banks to a larger extent because banks have to follow according to the directions given by the central bank which reduces the profit of the bank.
Now a days banks cannot charge their own management interest rates they are force to look the market and follow according to the RBI rules and regulations, this has unable them to balance both the income and expenses, for eg., now the fixed deposit interest rate is 10.5% and is housing loan interest rate is 8.5%, they have the bear the loss of -2% which the banks have to pay themselves. Middle class people cannot afford to the current interest rate, it is too expensive for them.
To broaden the customer base the vast middle income strata should be fully exploited who are very sentimental about house property in India Simplify the procedure, reduce service charges, and demand only the basic essential proof. Most banks are reluctant to advance loan to the service class e.g. lawyers, police officers etc.. This aspect must be exploited.
