The home loan industry is growing at an annual rate of 22% per annum. There is a continuous increase in the disbursement of home loans. Also, even new finance companies and small finance banks are coming up in the markets to disburse loans. Thus the competition between the lenders is becoming more and more endangered. Loans help people plan and buy a house at the early stage of life and also helps to boost the real estate industry. The government of India is also optimistic about giving a boost to the real estate industry. The PMAY[Pradhan Mantri Awas Yojana] helps increase the people’s financial ability for the purchase of the flat by providing the subsidy amount of Rs.2.67 lakh under the housing for all scheme. The real estate sector is the second largest employer in India after agriculture and employs both the blue-collar workforce and the white-collar workforce. The investment by the people in the real estate sector provides a great boost to the economy as the investment is huge in the real estate sector. Also, the government generates a substantial amount of money from the GST and registration stamp duty charges; thus, the real estate sector is an excellent source of income for the government.
The home loans interest rates are also declining, thus making it an attractive proposition for the borrowers for the disbursement of loans. Many flat buyers have been able to fulfill their dream of buying a home with the help of home loans. The public sector banks dominate the share of the home finance as the public sector banks are considered the most trustworthy ones compared to the private sector banks or the home finance companies with the 45% market share. There are multiple types of businesses being dependent for livelihood on the basis of the real estate sector. The businesses like construction contractors, construction material suppliers, architectural firms, structural audit firms, RCC consultants, home finance companies. Etc. Thus the dependence of multiple businesses on the construction industry is huge. Thus the investment in the real estate sector has a significant positive impact on the economy. Home finance helps people avail loans and repay the amount to the banks for 10,20, or 30 years. Thus, it is beneficial for everyone in the real estate sector, flat buyers, and home finance companies; it is a win-win situation.
Following are how the home loan industry in empowering Indians:
- Boost to the real estate sale:
The real estate sector is posting healthy growth in the post-pandemic period, thus having a positive sentiment in the markets. The real estate sector is growing consistently due to falling interest rates on home loans and the easy availability of loans. A home loan makes it easy for people to plan the finance and helps increase the flat sale as many buyers cannot buy the flats without opting for home loans.
- Helps people plan to buy homes at an early stage:
Home finance helps people buy homes at an early stage as people can avail 80% of the property value as loans, thus helping the real estate sector grow and also help people do early planning of buying homes. The real estate prices keep rising consistently; thus, early planning and buying of the homes are beneficial for the flat buyers.
- Helps in increasing revenue to the government:
The real estate sector is a major source of income for the government. The higher the people’s investment, the higher the returns gained through GST collection, registration & stamp duty charges. The taxes collected are being distributed to the state government, central government, and municipal corporation. And the funds are utilized for welfare projects & infrastructure projects. Thus the investment by people in the real estate sector is of national importance.
- Help people save taxes:
The flat buyer who has opted for home loans can avail of income tax benefits under income tax act 80C. This concession is given to the flat buyer up to Rs.2 lakh beyond the exemption limit of the tax slab of Rs.2.50 lakh. Thus, the government’s concession can help save money for an individual as the borrower has taken the additional burden of availing of loans.
Thus we can conclude home loan industry is of national importance as it helps a win-win situation for both the home loan buyers and the Real estate developers. The home loan industry has helped millions of buyers across India buy their dream home by availing of loans and has also helped the government greatly collect taxes. The home loans are exempted under income tax act 80C, thus helping borrowers save money on income tax payments.