Now Is The Time To Buy Property
You have to tread cautiously in case you nurture the hopes of being a property owner. There are so many things you need to keep in mind before you initiate the purchase. However, almost everyone will tell you this is one of those times when you do not have to think excessively to invest — the time is ripe. In most states, the Real Estate Regulatory Authority has been established—this legal body will make sure all your rights as a buyer are guarded. The Goods and Services Tax (GST) has come into force—the new regime ensures that you pay only a single indirect tax on your purchase and are not baffled by the sheer number of levies. A unified rate also means developer have no scope to charge you more in the name of various taxes.
Are you not confident about making an entry into the world of real estate? You certainly are. A move that encouraged you to hurry things up now is a reduction in repo rate. The Reserve Bank of India (RBI), in its third bi-monthly policy review on August 2, decided to slash the rate by 25 basis points (bps) to bring it down to six per cent. This reduction could not have come at a better time.
It is important to note here that it is after a long time that the RBI has reduced rates. But, equally important to note is the fact that repo rate has reached its lowest level since November 2010. This means it was only six years back that taking a home loan was this affordable. Another notable fact is that the since April 2015, there has been a 150 basis points fall in repo rate. Banks, too, have reduced their marginal cost of funds-based lending rates in the 75-250 bps range during the same period.
For the uninitiated, repo rate is the rate at which the Central bank lends money to financial institutions. When banks pay less interest on availing of funds, there profits margins rise. They in turn extend the benefits of this reduction in rates to borrowers.
In case you doubt whether banks, which have already implemented major reduction in rates after demonetisation, would show any hurry to pass on the benefits to you, here is something to cheer about. Voicing concern over this tendency of banks (to not pass on the due benefits to borrowers), the RBI had set up an internal panel. Recently, the panel recommended that banks should link their home loan rates to the RBI's repo rate. It also suggested that the reset period be kept at one month. Currently, banks follow a reset period of one year. The RBI is yet to accept the recommendation.
“Though the marginal cost of funds-based lending rate (MCLR) system is an improvement over the base rate system, monetary transmission by banks has not been entirely satisfactory,” the RBI said in a statement on developmental and regulatory policies.
There is hardly any reason for you to worry now. This might sound familiar and opt-repeated, but this time it certainly is the right time to implement your plans of buying property.