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Real Estate Sector Loses Steam
Posted by Pradeep Sadanapalli | June 14, 2008 | 366 views
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Loading ...The revision of interest rates on home loans is sure to put a dent on the booming real estate sector. Both public and private sector banks have decided to review its interest rates structure at its asset liability committee meeting scheduled in Mumbai on Friday.
Currently, banks charge 10.5 per cent interest on floating loans and about 12 per cent on fixed loans.
With the revision, the floating interest is likely to go up to 11 per cent and 12.5 per cent on fixed loans. Three years ago, the interest on home loans was 7.5 per cent. Because of the real estate boom, people pumped in a lot of money to built their own houses in the twin cities.
With the constant increase in the interest rates, the EMI which was around Rs 850 per lakh three years ago may now cross the Rs 1,100 mark. In addition to more interest rates, banks will also slash the loan amount as it is calculated on the income of a buyer. For instance, an employee who earns Rs 20,000 is now eligible for a loan not more than Rs 10 lakh. Earlier, the ceiling was Rs 13 lakh.
The Greater Hyderabad Builders’ Federation expressed unhappiness over RBI’s decision saying it failed to consider the impact that its decision will have on the real estate sector.
SOURCES:
Deccan Chronicle
Topics: Finance, Govt Failures, Real Estate |
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