Home loan interest rate subsidy cut by government
The governm
ent focuses on austerity over growth to contain the increasing fiscal deficit, it has cut the size of interest rate subvention corpus for affordable housing loans by 20%.
It has fixed the corpus at Rs 400 crore for the current fiscal, 20% less than last fiscal’s Rs 500 crore.
The government runs a 1% interest subvention scheme for housing loans up to Rs15 lakh to generate additional demand for credit and provide fillip to a sagging real estate sector. But the decision to shrink the corpus has raised questions on whether the government is expecting a lower growth in housing finance.
The government is also contemplating cutting subsidies on diesel and LPG to reduce the fiscal deficit to 5.1% of the GDP this fiscal from 5.7% in 2011-12.
Earlier this week, the Union cabinet had given its consent for extending for one more year, till the end of 2012-13 fiscal, the 1% interest subvention scheme on housing loans up to Rs15 lakh where the cost of the house does not exceed Rs 25 lakh.
To read more real estate news:
SBI home loans show slower growth
SBI to provide home loan at cheaper rates
Source: Economic Times
austerity, corpus, fiscal deficit, Home loans, Housing loans, Interest rate, Real Estate Sector, Subsidy, Union Cabinet
From when the subsidy will apply and will all the banks have to issue the subsidy to its customers