Home Budgets To Take A Hit As Emis Go Up, Say Citizens; Realtors Fear Short-term Impact On Sales | Kolkata News

KOLKATA: The announcement by the central bank to hike the lending rate of short-term funds to banks that will impact the interest rate on bank borrowings has left home loan customers anxious. HDFC Bank on Thursday announced a 0.5% increase in interest rate on new home loans but allowed old customers to continue with the existing rates for three months. State Bank of India is yet to announce a rate change.
With home budgets already under strain due to a hike in petroleum prices that led to a rise in LPG cylinder price as well as vegetables and groceries, people are now faced with the prospect of reduced disposable income as EMIs will go up once banks announce a revision in home loan interest rates.
“I have a floating loan from a private bank and have a hefty EMI of more than Rs 30,000 per month to pay to the bank and I have been going extremely tough on my home budget to manage the expenses that include a home loan and a car loan. With the RBI increasing the repo rate, I wonder if this is going to increase my EMI and put me into an even tighter situation, ”said Puja Sengupta, a graphic designer with an MNC.
Souvick Basu, a techie who currently pays an EMI of around Rs 28,000 per month for his four-year-old flat in Behala, also called up his CA for more transparency.
While existing home loan customers will have to absorb the impact, developers fear the hike to temporarily affect sales.
“There may be a slowdown for around two months. Thereafter, the situation should normalize. We had expected the RBI to increase the rate but did not expect a 40 basis point hike at one go. It would possibly have been better, had the hike happened in two tranches, ”said Confederation of Real Estate Developers’ Association of India (Credai) West Bengal president Sushil Mohta.
Credai Bengal president Nandu Belani, too, felt the negative impact should be short-lived as interest rates will be low even after the banks announce a hike in the wake of the RBI announcement. The interest rates are hovering around 6.5% to 7.2%. This will go up to 7.5% at the most. There will be a psychological impact in short term but that should not have a long-term impact, ”said Belani.
Eden Realty Group MD Arya Sumant, too, felt the hike would not have a major impact on the sector. But Abhishek Bhardwaj, chief marketing officer of Shristi Infrastructure, felt the hike in rate would lead to a hike in input cost and put further stress on margins due to rise in cost of borrowing.


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