Jaipal Reddy proposes cut in home loan rates

New Delhi, June 16

Urban Development Minister Jaipal Reddy Tuesday sought to boost affordable housing, proposing an interest rate of 7.5 percent on loans for houses costing between Rs.5 lakh and Rs.30 lakh.

The proposal was made at a pre-budget discussion with Finance Minister Pranab Mukherjee. Reddy also advocated an interest rate of 6.5 percent for houses costing less than Rs.5 lakh.

"It was a pre-budget meeting and we discussed budgetary issues," he said after the meeting.

"The real estate is facing a crisis and so we have proposed a lower interest rate to boost demand. The interest rate cut will motivate more home buyers," Reddy said.

At present, interest rates vary from 9.25 percent to 10.25 percent for loans up to Rs.30 lakh for new customers.

Other proposed incentives include increasing the income-tax limit exemption on rental income from house from 30 percent to 50 percent.

As per the agenda presented to the finance minister, budgetary allocation for the urban development ministry will remain at last year's level.

However, Reddy has asked for higher allocation for Commonwealth Games projects, extension of the Metro network in the national capital, and for projects under the Jawaharlal Nehru National Urban Renewal Mission.

The ministry has also proposed that buses meant for urban transport with more than 20 seats be exempted from the value-added tax and the central excise duty.

Last updated on Jun 16^th, 2009 at 18:25 pm IST--IANS

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