Home loan rate likely to increase in near future

Home loan rates are mounting frequently from last six months and reached to 1.75%. After the previous increase of 0.50% in key rates by Reserve Bank of India, and according to the sources interest rate is likely to rise more in the near future.
According to the bankers the increasing home loan rates will decrease the demand for housing. Whereas homebuyers may continue with their activities but investors may think twice before investing in real estate or may be take a pause for upcoming projects. Where hike in interest rate will affect to existing buyers similarly it also affect to the new buyers too. As per the previous fiscal year interest rate was 9% and now it rose to 10%. Though 1% hike is looks very small but when you will calculate yearly it’s very huge.
Hike in interest rate will directly affect to home loan as after every 1Lakh rupees loan EMI will increase to 6%. And burden automatically rises on end-user to 13% for 15years repayment period, if repayment period is 20years then it goes to 13.65%.
“We believes that due to slowdown in the demand of home loans investors will reduce the prices, the buyer may not be change his mind but investors will think twice before investing in property market” BB Joshi Zonal Manager of Bank of India said. Widening gap between Demand & Supply will force to realtors to reduce prices, he added.

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