The expected extension to Pradhan Mantri Awas Yojana (PMAY) in the upcoming budget will further strengthen the pick-up in affordable housing.
Together with Credit Linked Subsidy Scheme (CLSS) under PMAY, low interest rates of sub 7% has been responsible for driving housing sales despite Covid onslaught. Keeping this in mind, the Housing Ministry is keen to keep this momentum going by extending CLSS beyond March 2021. A maximum of Rs 2.67 lakh of interest subsidy is available for homes costing up to Rs 45 lakh. The interest subsidy of 3% to 6.5% is available under this scheme with a loan tenure of 20 years. The interest subsidy amount is calculated at a discount rate bof 9%. The interest subsidy is credited upfront to the loan account of beneficiaries, resulting in reduced effective housing loan. It is deducted from the principal loan amount, resulting in lower EMI. The heady combo of interest subsidy for affordable housing and low interest rates led to increase in housing sales. Particularly Q3, 2020 saw housing sales volumes increase by more than 2.3 times to about Rs 29731 cr. This was up from Rs 12694 cr in preceding quarter, registering a significant jump of 134%. According to property consultancy Anarock, October- December quarter home sales are likely to witness 35% cumulative increase. A rebound of more than 50% in housing sales is likely in calendar year 2020.