Home Loan EMI: Interest rates in the country have been increasing continuously since May last year. As soon as the Reserve Bank indicated to increase the repo rate, all the banks started increasing the interest rates. Now that the Reserve Bank has kept the repo rate constant for two times, even after that the bank interest rates are being increased. In the latest case, three banks have increased their interest rates since the beginning of this month. Its biggest impact has been on the people planning to fulfill their dream of buying a house. Home loan interest rates have increased wildly in the last two years.
These 3 banks have increased the rates again
For now, ICICI Bank, Punjab National Bank and Bank of India have increased the rates by 1 Marginal Cost Based Lending Rate ie MCLR has been increased from August. Work loans for common people, also known as consumer loans, are generally based on one year MCLR. Such loans include auto loans, personal loans and home loans etc. It is natural that all these loans have become costlier due to increase in MCLR. After the latest hike, the one-year MCLR stands at 8.90 per cent for ICICI Bank, 8.60 per cent for Punjab National Bank and 8.70 per cent for Bank of India.
The threat has not subsided yet.
This is not the first time that banks have increased their interest rates. In fact, the Reserve Bank had greatly reduced the policy rates to support economic growth at the time of the Corona epidemic. Later, when inflation started making records, the Reserve Bank was forced to increase the repo rate. The Reserve Bank started increasing the repo rate by holding an emergency meeting of monetary policy in May last year. Since then, till now the repo rate has been increased by 2.50 percent. In the last MPC meeting held in June 2023, the repo rate was kept constant for the second consecutive time. However, with inflation rising again, there are apprehensions that the Reserve Bank may have to take a decision to raise the repo rate again in its meeting this month.
Affordable housing burdened the most
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Meanwhile, a worrying trend has emerged in a report by property consultant Anarock. Anarock’s report says that the biggest impact of the pandemic has been on the affordable housing category. Affordable housing sales have declined by about 20 percent during the first six months of >2023. The biggest reason for this is the record increase in the EMI burden. As per the report, the EMI burden in the affordable housing segment has increased by 20 per cent in the last 2 years.
Interest more than the principal amount
For home loans up to Rs 30 lakh The floating rate was 6.7 per cent two years ago i.e. in the middle of 2021, which has now reached 9.15 per cent. This means that in the case of affordable housing, interest rates have increased by 2.45 percent in the last 2 years. Another meaning of this is that if a home buyer is taking a home loan for 20 years, then he is paying more interest than the principal amount in the current situation. It is natural that such costlier loans will have a bad effect on demand. Rely on home loan to buy a house. Loans for home buyers in the affordable housing segment fall in the category of up to Rs 30 lakh. A report by SII Research states that loans up to Rs 30 lakh accounted for 60 per cent of total home loans during April to June 2022, which came down to 45 per cent during January-February.
Help is needed from the government
Pradeep Agarwal, Founder-Chairman of Signature Global (India) Limited, explains the reasons for the increase in EMI of common people’s homes. They say that many factors are responsible for this. The biggest factor is the increase in interest rates, apart from this, the increase in property prices due to demand, increase in land cost and high cost of construction have also affected. He also demanded a special exemption from the government to provide relief to the people in the affordable housing segment. According to Aggarwal, the government should give some relaxation to home buyers in this segment, so that the increased EMI burden on them can be reduced to some extent.
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