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.

Sources :Accommodation Times

Housing Finance to get interest subvention up to Rs.15L

On repayment of the first twelve monthly installments will get the 1% interest subsidy. As there were several announcement made by the finance minister during the Budget session of 2011 now on of them has come true and that is subvention of home loan interest. Reserve Bank of India (RBI) on 21 April said to scheduled commercial banks to impose new norms related to the interest subvention on home loans on the higher priority basis. As per the new norm that homebuyers will get an interest subsidy of 1% on home loans up to Rs.15L for buying & constructing a home within the overall cost of Rs.25L. This new rule will be available only for those loans which have been sanctioned between 1 April 2011 to 31 March 2012. And this norm will be applicable on the repayment first 12 EMIs, after that borrower will have to make payments as per the applicable interest. The subsidy will be available on both the fixed and floating interest rate loans, and moreover it will also available in both areas rural and urban both. The scheme would be implemented by scheduled commercial banks and housing finance companies registered with the National Housing Bank (NHB). Sources:Accommodation Times