Budget gives a reason of joy to home loan borrowers

To rein rising inflation the Reserve Bank of India has hiked the interest rates seven times since March 2010 and as a result a direct impact was seen on the demand for the home loans.

However the budget for the year 2011-12 brought a lot of relief for the customers in its own ways. During the budget the Finance Minister proposed to raise the limit on eligibility for subsidy on the interest rates for home loans and also widened the scope for housing under “priority-sector lending" for banks.

Chairman of Jones Lang LaSalle India Mr. Anuj Puri said "Raising the priority home loan limit is good news for the low income group segment, but will do nothing to ease the pain in the metropolitan cities where prices and demand for affordable housing is highest."

Finance Minister has proposed to raise the limit for a subsidy of 1 percent on interest rates on housing loans form Rs. 10 lakh to Rs. 15 lakh and for home-valued form Rs 20 lakhs to Rs 25 lakhs.

The Vice Chairman and Managing Director of Knight Frank India Mr. Pranab Datta said "During the last one year the prices of residential real estate has increased by 10-20 percent across several cities. This enhanced limit for interest subvention will ensure continued benefit to the buyers of this particular segment."