Increasing Home Loan Rates - Crippling the Consumers

April 1, 2007	(1 votes, average: 5 out of 5)  Loading ...
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With increasing interest rates on home loans, owning a home has become an illusion than a dream. It is to go through the rooftop in future following the rising cash reserve ratio (CRR) and inter-bank short-term lending rates (repo rates). The ongoing interest rate on home loan is 11 per cent.

Some banks including ICICI bank and YES Bank, India’s new age private sector Bank, are to raise home loan rates by one per cent. Close by the heels are HDFC Bank and IndusInd Bank, who are likely to follow suit.

Such a rise is certainly going to have an impact on real estate market in India, which was reaping the windfall of a strong economy. High EMIs and low liquidity may lead to a drop in property rates, as the prospective buyers are thinking about to postpone their decision to buy a home.

The state which is suffering the most because of a hike in home loan rates is Punjab. Moreover, it is already undergoing uncertainty following the change of political regime. The new government has not come up with its intentions yet. This coupled with increasing EMIs and falling liquidity has created a tense situation in real estate market.

While property rates in Zirakpur are plummeting because of its poor infrastructure, Mohali, the satellite township of Chandigarh, is too facing over supply. The northern sectors of Chandigarh are not seeing a downward swing.

Automakers and sellers are also spending sleepless nights because of the rising EMIs which they see as another blow to the two and four wheeler market. Undoubtedly, inflation is on high which is continuously putting the strain on the middle income buyers. Individuals who have already purchased houses and cars are likely to meet their commitments by liquidating a part of their investments, says a source in HDFC Bank.

News Published Under:   Home Loans |

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