ICICI Bank’s recent hike in
home loans interest rates has forced everyone to think about the
real estate prices. Will they shoot up or sink down?
Such a step seems to have given a way for the prospects of paying
even larger EMIs. Earlier, the banks had only increased the repayment
tenure keeping the EMI fixed in cases where the extended tenure
does not go beyond the borrower’s retirement age. This option
is also not available now thereby crippling already suffered consumers.
Taking the EMI values into view, it was Rs. 868 per lakh at 8.5%
interest. At 11%, the interest alone amounts to Rs 916 for fresh
borrowers. This clearly underlines that the EMI can change with
an extension in the tenure of repayment.
Bringing about a sudden hike in home loan interest rates seems
to breaking the bank of consumers. Those who were paying Rs 10,000
as EMI in the year 2004, when the interest rates were around 7%,
would now be paying Rs.15, 000 as the hike in EMI over the past
two years is an even steeper 33%.
The situation has affected real estate sector badly, where the prices
have started sinking down. Contrary to this, the commercial property
rates across the country are still going up and the trend appears
to continue in future, say real estate connoisseurs. Also, if present
interest rates continue, the economy is likely to slow down, which
would further result in a fall in interest rates.
