Home Loan Scenario in India

May 25, 2007	(1 votes, average: 2 out of 5)  Loading ...
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There have been major up and downs in home loan market in India, but the Centre has taken some steps to offer relief to borrowers. With increasing interest rates on home loans, the common man carries the burden of fat EMIs.

Since March, the interest rates fluctuations have been puzzling public and even to some experts. The floating interest rate is now around 11.25-12% while the fixed rate is hovering around 13.25-14%. The beginning of 2007 saw floating and fixed rates at 9.75% and 11%, respectively. If the loan is taken for the short term, the increase in rates – by 150 basis points – changes to a 9% rise in the EMI bill in the last three months.

Adding to the woes came floating and fixed rates which were only 7.75% and 8.25%. This translates to more than one-fifth increase in EMI for the borrowers narrowing down on floating rate loans. In case of fixed rate home loans, it could be one-fourth.

New Guidelines to Cut on Prices

Foreign companies have been trying hard to make big in Indian real estate. Many local real estate developers had been availing the opportunity to raise money from abroad to invest here. Easy money was pushing the property prices and leaving home buyers at the receiving end.

The finance minister cracked the whip on raising foreign funds from May 1. Coupled with the directives released by the Reserve Bank of India (RBI), the foreign fund leash is likely to stem the increasing property prices.

Investment Guidelines

The Government simply wants to keep a sharp eye over speculations in real estate and arrest volatility. No one raises finger on the long term growth potential of the sector. In case, the market continues to witness upward trends, small time investors can ask for their shares as well. The market regulator, SEBI, is learnt to give final touches to directives for realty mutual funds.

News Published Under:   Home Loans |

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