To create more demand in the economy through promotion of low-budget housing for the middle income group, the government on Thursday approved the proposal for one per cent interest subsidy on housing loans up to Rs 10 lakh.

An interest subvention of one per cent will be available on individual housing loans up to Rs 10 lakh for construction, purchase of a new house or extension of an existing house, provided the cost does not exceed Rs 20 lakh.This will be available through all Nbfcs and Housing Loan companies.

This waiver will result in savings of Rs 10000 for a Home loan seeker of 10 lakhs.The total cost of such subsidy to Govt can cost them upto 1000 crs.

With such measures some signals are clear.Got is supporting housing but is it actually helping customers.There are two sides to this.A lot of customers feels that with such measures that the Builders are not reducing costs.Even if you give a subsidy and the cost of housing is increasing, the middle class has less chances of buying a property.

The best move according to few is make housing rates low rather than low Home loan rates.This will result in more demand and will in real help Home seekers.

The other strange part in such move is Govt is expecting a person to fund 50% of the amount by himself to qualify for such subsidy and as max Loan amount of 10 Lakhs is allowed where as property value is 20 lakhs max.

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