In India and many other countries across the world, it’s an ultimate dream for many that they will one day own a house; however, in the past that has been impossible thanks to high-interest rates and impossible mortgage applications.
During the past few years, India has made it a lot easier to buy a house through their fixed mortgage interest rates, and other countries are beginning to follow suit. Read on to find out the measures that the RBI (Reserve Bank of India) have put in place surrounding mortgages, and how this has inspired other countries across the planet.
“Interest Rates” (CC BY-SA 2.0) by 401(K) 2013
Why are Interest Rates Important?
When you’re buying a house, it’s important to know what the interest rates are on your mortgage. This is a pivotal part of the agreement you make before you even step foot in your property, and it’s often beneficial to shop around on the market in order to find the best deal for your needs. For many, this will likely be an overwhelming experience in that there are so many competitors on the market to consider. However, it’s important to note that there are useful resources available for those who don’t know where to start with interest rate comparisons. For example, in the UK, buyers can utilise free online mortgage advisors like Trussle, who will liaise with lenders directly to get you the best deal possible on your mortgage; that includes paying attention to interest rates and striving to keep them low. So, why exactly are interest rates so important?
Well, most prominently, your interest rate determines how much you’ll pay back each month. If the rate is high, you’ll quickly find yourself paying an extortionate monthly amount in no time. Overall, this will eventually mean you pay back much more than you borrowed in the first place. High-interest rates make it much harder for people to get on the property ladder, especially younger people or those with a low income. Not only does this impact on an individual level, but it has a detrimental effect on the economy of a country.
“Money changing” (CC BY 2.0) by reverses
Thankfully, the RBI is working to continue preventing this problem in India, by pledging to keep interest rates at just 4%. This marks the ninth time they have decided to retain this rate. While this is primarily to increase the economic growth of India, it also carries huge benefits for the general population.
The pandemic in recent years has had a destructive effect on many countries worldwide, and India is no exception. Though keeping this low-interest rate might seem counterproductive for economic growth, it actually makes more people likely to buy a house and nurse the economy back to pre-pandemic levels. Of course, this is great news for the rest of us too; now, we’re more likely to have a chance of buying our dream home than we have in many years.
Other Countries Following Suit
Since India has decided to do this, the Bank of England has also considered lowering interest rates on mortgages, as well as relaxing the stringent rules on getting an application approved. Hopefully, prospective buyers will no longer have to prove that they can afford to pay back their mortgage even with high-interest rates; this means that people will be able to afford to borrow more and, just like in India, more people can afford their dream home.
To conclude, retaining low-interest rates on mortgages is just one of the ways that India is attempting to generate economic recovery. It’s great news for anyone who wants to buy a house soon, and it’s inspired other countries to follow suit.
