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Saturday, November 8, 2008

Home loan interest rates have come down to around 10.25 - 11% on amount up to Rs 30 lakh! Are you booking a 2 bhk compact flat at an affordable rate?

When i read the story "Construction poised to pick up: Demand for realty to get a boost again" written by Prabhakar Sinha in today's The Economic Times, i understood why Finance Minister P Chidambaram had whipped the public and private sector banks to reduce the home loan interest rates. F M knows well that you are tired of postponing booking a compact, luxurious, 2 bhk flat at an attractive rate.

F M knows that you want that car which comes as a free gift along with the flat. F M knows that Obama can change everything except outsourcing to India. F M loves you and he is doing his best to make you happy.

Real estate developers also love you. This time, builders have decided not to increase the property rates though there will be increase in demand. Builders are not only sacrificing their profits for you. They are sacrificing their future. Builders are going to use installments of your payment for construction, not for purchasing more land.

Most of the builders are thankful to you and your F M for giving them an opportunity to complete their dream projects. God bless you. God bless your housing finance company. God bless F M.

Related Stories:

1) Be ready to pay as much as 40% own contribution upfront if you are planning to buy a home on a bank loan

2) Diwali Offer: Buy 1 flat Get 1 free !

3) Is it the right time to invest in property?

4) Can our banks weather the financial crisis? - PSM Rao

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  1. "Are you booking a 2 bhk compact
    flat at an affordable rate?"

    There are two fundamental flaws in this argument.

    1. Purchase decision is more dependent on property rate and less on interest rates. So when u say affordable rate, first need is to see property rate are affordable or not. If they are not, even a 0% interest rate will be useless.

    2. Lets assume relavance of rates to be only interest rates. Now if someone says interest rate are affordable ( i doubt this is tru even today), they can chance anytime. In just 3 years, we have seen rates in the range of 7-14 %. There is no gurranety that if u buy say at 10% today, they will remain same for loan life span. So even this argument does not hold any water.

    Bottom line is property raets are totally inflated and unafforable. Unless they come down by at least 50% , no buying activity will start.

    I know there will still some games be played like threatenign to increase rates further. But in the end, builders are set to burn their own fingures unless they cut down greed and lower the rates drastically.

  2. Words 'compact' and 'affordable' are f***ing misleading. Tell the rate per sq. ft. and see how the buyer shows you ..i.. for any damn interest rate.