Metro connectivity reduces transport costs.Image Credit source: AI generated
If your house is near a metro station, it can also have a positive impact on your home loan EMI. This has come to light in a new research by the Prime Minister's Economic Advisory Council (EAC-PM). Till now, the expansion of the metro rail network has been linked to ease of travel, less traffic and environmental benefits, but in this report, attention has been drawn to another big advantage of it.
According to the report, metro connectivity reduces people's daily transport expenses. When people are less dependent on personal vehicles, expenses like fuel, maintenance, parking and vehicle loan reduce. This reduces the pressure on the monthly income of households and people are able to repay their home loan EMI on time and easily.
Cities like Delhi, Bengaluru and Hyderabad were studied in the report. The home loan repayment behavior before and after the expansion of metro network in these cities was compared. The results were very important. This working paper of EAC-PM has been prepared by Soumya Kanti Ghosh, Pulak Ghosh and SBI economist Falguni Sinha. It has been told that in the last decade, investments made in urban infrastructure like metro have strengthened the financial position of households and the habit of repaying loans has improved.
In Hyderabad, home loan defaults in metro areas decreased by about 1.7%, while the number of people paying more than prepayment i.e. EMI increased by 1.8%. In Bengaluru, default decreased by 2.4% and prepayment increased by 3.5%. This effect was more visible in Delhi, where defaults reduced by 4.42%. The report also shows that after the arrival of Metro, there has been a decline in new purchases of two-wheelers and cars. It is clear from this that people are choosing public transport instead of private vehicles. Not buying a vehicle not only reduces the loan but also reduces the monthly expenses.
