PM’s housing loan interest subvention to boost low cost housing


MUMBAI: The government’s decision to provide interest subvention of 3% and 4% for loans of up to Rs 12 lakh and Rs 9 lakh, respectively under Prime Minister Awas Yojana (PMAY) is expected to boost low income housing in peripheral areas of urban localities across the country.

In a bid to achieve its Housing for All vision, the government has announced interest relief for loans up to Rs 12 lakh for homes in urban areas.

In rural areas a 3% subvention will be given for loans of up to Rs 2 lakh to build and expand existing house.The government has also decided to increase the number of homes to be built in rural areas under PMAY by 33%, Prime Minister Narendra Modi said in his speech on New Year’s Eve. .

“This will provide a strong boost to mass housing in peripheral areas of all eight metro cities. Localities like Bhiwadi, Nimrana, Daruhera around Noida extension and Yamuna Expressway in the NCR region will see good demand for housing as average loan size for houses is between Rs 10-12 lakh. This will kick-start markets on the outskirts of Mumbai, Pune, Hyderabad, Bangalore, Ahmedabad and Chennai,” said Getamber Anand, President – CREDAI National.

Under the Prime Minister’s vision of ‘Housing For All by 2022’, the government has already announced various benefits including interest subsidy of up to Rs 2.2 lakh for homebuyers.

“The Prime Minister has effectively made the EMI cheque smaller than the rent cheque for the affordable housing segment – a tremendously positive announcement coming on the back of many directed steps to realise the “Housing for All” objective. This with the Credit Guarantee for SMEs will ensure small business owner and the middle class salaried customer will be able to achieve progress in their business and move out of rented homes to own their own house,” said Gagan Banga, Vice Chairman, Indiabulls Housing Finance that has recently launched 100city – smart city Home Loan product to provide affordable home loans and SME loans in smaller cities.

Under the government’s existing credit-linked subsidy scheme, beneficiaries of economically weaker sections (EWS) and low income groups (LIG) seeking housing loans are eligible for an interest subsidy at the rate of 6.5% for tenure of 15 years, or during the tenure of loan, whichever is lower on the initial Rs 6 lakh.


Walls N Roof Comment  : The government’s announcement of interest relief for loans up to Rs 12 lakh and 9 lakhs respectively is all set to boost the low cost housing. Housing for all by 2022 is ambitious mission of the government. Peripheral areas of Mumbai like Shahpur, Neral etc. are all set to witness affordable housing construction of 15000+ affordable homes. Emgee Group’s construction will be in Neral and Shahpur in the price range of Rs 8 lakh to Rs 14 lakh. Apart from the Emgee Group the construction for affordable homes will also be undertaken by Karrm Infrastructure in Shahpur.  This development will help homebuyers in these projects qualify for benefits of credit-linked subsidy scheme under the Pradhan Mantri Awas Yojana (PMAY).