Reports indicate that the Central Government is preparing to introduce a new home loan subsidy program aimed at assisting small-scale homebuyers. This initiative is expected to launch in the coming months, offering relief to many prospective homeowners who have been grappling with rising interest rates on home loans in recent years. Since May 2022, home loan interest rates have surged by more than 200 basis points due to the Reserve Bank of India (RBI) raising repo rates on four consecutive occasions.
This increase has resulted in a 20% rise in home loan EMIs, negatively impacting borrowers. According to reports, this new home loan subsidy scheme will specifically target over 25 lakh home loan borrowers in low-income urban communities. The extent of the subsidy provided will depend on the demand for smaller homes in these areas.
Currently, it is estimated that the scheme will have a budget of approximately Rs 60,000 crore, to be distributed over the next five years. During this year’s Independence Day address, Prime Minister Narendra Modi announced the government’s intention to introduce a scheme that would facilitate cheaper home loans for individuals residing in rented accommodations.
This upcoming scheme has the potential to be a game-changer for both new homebuyers and the real estate industry. The government plans to offer an interest subsidy ranging from 3% to 6.5% on home loans up to Rs 9 lakh, with concessions available for loans under Rs 50 lakh, spanning a 20-year tenure. Beneficiaries can expect the interest subsidy to be directly credited to their home loan accounts.