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Interest on housing loan reduced, applicable from 1st January, 2017

  • The interest on housing loans has been decreased to 3-4%, from 1st January, 2017 for all those people who have an annual income of less than Rs.18 lakh.

    Prime Minister Narendra Modi had announced the interest subsidy on December 31, though the annual income criterion was not announced then.

    The benefit of the interest subsidy can also be availed by unmarried and earning young adults for acquisition or construction of a new house including re-purchase. Moreover, flats measuring up to 960 sq ft and 1,184 sq ft will be eligible for 3% and 4% interest subsidy respectively for the specified income group.

    Earlier, the housing ministry had moved a proposal to provide 4% rebate on interest rate for loans up to Rs 9 lakh and this can be availed by those who earn up to Rs 12 lakh annually in urban areas. Similarly, people earning up to Rs 18 lakh annually, will be eligible to avail 3% rebate on interest for loans up to Rs 12 lakh. 

    The housing finance sector further said that though the government had finalised the policy, it has not yet announced it because of election code of conduct. In fact, the ministry had held a meeting with banks and housing finance companies where the operational guidelines for “credit linked subsidy scheme for middle-income groups (CLSS-MIG)” were discussed. 

    The rebate in interest rate is likely to push housing demand in urban areas and thereby help the sector to revive. 



    OUR TAKE

    The reduction in the interest subsidy on housing loans is one of the major steps taken by the Modi government in favour of the common man. This will most importantly reduce the burden of paying back the loan and further act as an encouraging element for the people to purchase their own houses. 


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