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Home loan rates are still about 150 bps below those prevailing in 2019.
The back-to-back interest rate increases have raised equated monthly instalments (EMIs) by up to Rs 12,000 for those with loans of Rs 1 crore and above.
Taking into consideration, for instance, a total transmission of a repo rate hike, the home loan of Rs 2 crore in Mumbai, the EMI has raised from Rs 159,898 per month before the rate hike to Rs 164,807 in May and now Rs 171,041 in June, according to a report in ET.
“The bank that I availed a loan from has recently informed me that the EMI will keep moving upward depending on government rates. It will put further pressure on the monthly budget for us,” Ravi Krishnan, who took a loan of Rs 1. 5 crore last year, told the financial daily.
Generally, lenders increase the tenure of the home loan, keeping the EMI stagnant. It is, however, sensible to go for a higher EMI instead of an increased tenure as the total interest outgo becomes much higher if the term of the loan is hiked.
Shishir Baijal, chairman, Knight Frank, told the daily: “The performance of the broader economy will have a greater bearing on market momentum for the remainder of the year as it dictates homebuyer income levels and demand much more directly.”
Meanwhile, many banks have raised the interest rates on home loans following the central bank’s decision to jack up the policy repo rate by 90 basis points, in two tranches, to 4.90 per cent in an earnest attempt to cool persistently high inflation.
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