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News & Views on Indian Real Estate

Friday, August 01, 2008

Realty Projects, Home Loans set to get Costlier

The Reserve Bank of India’s decision to revise repo rate and cash reserve ratio is expected to bite the realty industry, which is already burning under a slowdown and price correction. Loans for housing will get dearer and interest sensitive sectors like real estate will be hit hard. The cost of borrowing goes up not only for builders but for all ancillary and input industries as well, leading to a higher price tag for the real estate product. Developers will now have to look towards other sources of funds, which could be on higher rates. A 0.5 per cent increase in home loan rates - which appears most likely - will increase the tenure of a Rs 3 million, 20-year loan by nearly three years. Real estate demand in major Indian cities has been hit this year as urban middle class buyers, fretting over a five-year high in property prices, have stayed away from investing in property as interest rates climbed rapidly. However, a few real estate agents said the rate hike could cause a possible softening of property prices, even in markets such as Mumbai.Developers are sitting on unsold stocks of completed apartments. But potential buyers are sitting still in anticipation that prices will come down

rehaan said...

WHEN people want to buy property or land for a home, you can expect them to go to a lending institution.But with the loans come the dreaded interest rates which eats away at repayments.Last year, interest rates went up two times and commercial banks are starting to implement the increase into their rates this year.Given the slowing down in economic activity brought about by the last coup, this increase in interest rates will put businesses and families at the margins of survival to considerable financial difficulty.Borrowers who struggle to meet their payment will, after this rate increase, face the risk of going bankrupt.

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Dhule Property said...

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