Higher Interest Will Push Up Monthly Installments For Home Loans
Higher interest will push up monthly installments for home loans for existing as well as new home buyers. The National Real Estate Development Council (Naredco) expects interest rates on housing finance to increase to 10.5 per cent for loans up to Rs 30 lakh and 11 per cent or more on loans above Rs 30 lakh.
Pradeep Jain, chairman, Confederation of Real Estate Developers’ Association of India, said: ‘‘The increase in rates will intensify the cash crunch scenario the industry is facing. The current pressure on prices is global in character and reflects supply-side bottlenecks. The solution is not monetary tightening.”
More than interest rates, what’s hurting home buyers is that many banks are now funding only 75 per cent of the cost of an apartment as against 85 per cent earlier. “The fact that the salaried class now have to supply a higher contribution to the cost of their homes is having a very tangible impact on demand,” said Ashutosh Limaye, Local Director – Strategic Consulting, Jones Lang LaSalle India.
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