EMI Rates Burdens the Loan Borrowers
Home loan borrowers are now facing a tough time as there is a slight raise in the EMI (Equated Monthly Installments). Banks have agreed to increase pre-payment charges at the meeting with RBI (Reserve Bank of India). The Central Government is concerned about the home loan burden on the loan borrowers. Henceforth they have put the papers to public sector banks which head initiative of 50 percent of the home loan market, asking them to increase the tenure instead of raising the EMI charges.
NHB (National Housing Bank) held a meeting of HFCs to discuss the issue of increase in interest rate and its impact on EMI on the consumers. HFCs reported back stating regular successive rise in rates is ending up in the difficulty to extend loan tenures. “The best option is to retain the EMI and increase the tenure of the loan”.
However banks claim that if the tenure is increased simultaneously the credit quality will be increased. The key policy rates have been increased 11 times since March 2010. If the interest increases and a substantial rate hike exceed the EMI, the banks will end up with an increase in monthly installments.
The subjugation of increase in EMIs is up to the judgment of the housing finance companies. The examination to this situation is closely observed says, R.V Verma Chairman and Managing Director of NHB.
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