By increasing the amount for the PM Awas Yojana the government plans to continue to promote affordable housing
The government’s increased allocation for PMAY comes in the backdrop of increasing home loan rates. Image: Shutterstock
There’s good news for those buying an affordable home. But for those buying ultra-luxury properties the news is not so good. Among the measures announced in the Budget the allocation for the government’s flagship housing programme the Pradhan Mantri Awas Yojana (PMAY) was increased by a huge 66 percent to over Rs79,000 crore. Under the scheme buyers based on certain income criteria can avail interest subvention on their home loans. Under the scheme a total of Rs1.35 lakh crore of assistance has been given. By increasing the allocation the government has shown that it aims to continue to promote affordable housing.
“It was a great measure to increase outlay towards PMAY which will help continue the momentum towards affordable housing. The outlay will help in expediting the housing-for-all programme,” said Shishir Baijal, chaiman and managing director, Knight Frank. In total loans for 122.69 lakh houses have been sanctioned so far and 68.02 lakh homes completed.
The government’s increased allocation for PMAY comes in the backdrop of increasing home loan rates. Over the last 18 months the average home loan rate has gone up 200 bps from 6.5 to 8.5 percent resulting in an increase in borrowing costs for home buyers. Under the scheme buyers in the Economically Weaker Section (buyers making under Rs3 lakh a year) got a subvention of 6.5 percent on their loan. This progressively reduced to 3 percent for those making up to Rs18 lakh a year.
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For buyers making more than Rs18 lakh the Budget did not increase the deduction on home loans and granted no new benefits for the purchase of a house.