Despite the recent hikes in home loan interest rates announced by the major banks, there seems to be no letdown in the rate of *interest* in the property market.
India's largest housing finance company HDFC, Punjab National Bank and the Oriental Bank of Commerce have hiked interest rates on home loans by at least half a percentage point (0.5%) on August 1, while others like the SBI and Bank of Baroda are soon expected to follow suit. As it stands, the floating rate for home loans from HDFC will be 9.5% as againstm, up from the previous 9%. The fixed rate loan borrowers will now have to shell out as high as 11%p.a. Despite FinMin's friendly advice (read dictum) to PSU Banks to rollback the hikes, there is no looking back, it seems.
Traditionally interest rates tend to take the cue from RBI's repo & reverse repo rate, which incidentally, were raised twice consecutively to over 50 basis points. Home loan rates have gradually risen over the past year or so from 8% to 11% and guess what, no one seems to really bother. Mumbai's bustling property market is currently on a sky-high, thriving on stock market boom fuelled by economic uptrend in general and IT /BPO boom in specific. Everybody seems to carry around enough cash to crash-purchase houses. Even the once abandoned properties such as " jinxed houses" or " haunted buildings" are up for the grabs.
It is only the fixed income/salary earners like me whose dream of buying a dream home might still only remain a dream!!!!!!!!!!!!!!!
So I can only console myself .." Home is where the heart is"...
14 comments:
that means we are all "home a-loan (alone)" !!
arago
When 'interest' to acquire a house increases, no wonder interest(rate)also increases !
Actually, HDFC, leader in the field has increased its loan rate by 1.5% since Jan 06 ( in three tranches @ 0.5% each). Alas,one of my friends who entered in this loan-mela in Jan last,has to cough up additional monthly at about Rs.1500/now in view of increased rate. After paying huge monthly instl of Rs.15000/ in addition hicked interest of 1500/, I am afraid one has to live in Home ALONE,without any food or entertainments !till loan is repaid in 15 or 20 years.
Housing Loan rates are long term interest rated normally linked to RBI's Bank Rate.(Repo rates are just short term money market rates) As the Bank Rate has not ben hicked by RBI, knee jerk reaction by Home Lone to repo rates in not appreciated by the powers that be. Hence FM has reacted.
...Gandy..
HDFC, being a wholesale borrower, is usually slightly more expensive to take a housing loan from as compared to the PSU banks who have lower borrowing costs.
Historically, to be competitive, HDFC used to give a discount on the PLR (which was 9.5-11%) of around 1.5%. This discount has now gone away with the property prices heating up.
My personal view is that with rising rates, property prices would eventually correct downwards. By how much ? One cannot say
If you are buying a house today, there are other considerations.. Do you really like the house ? Do you have to pay black ? etc,
Like Warren Buffet said.. Buy a house first and then speculate in the stock market.
I cannot think out living outside this city except for San Francisco and Singapore..
I wanna buy my own place too..but the rates just went up again for the 3rd time in 5yrs and it's not helping me at all.
I'll wait n see what happens...if not a home of my own, atleast I have my sanity in tact :)
Keshi.
Parag: I dont want to settle in some highrise in distant suburb and then fall down( like a failed stock trader)!!!I m better off in my shanty! Also I dont see property rates falling down in the short term.. And Sanfransisco? I cant think past Sanpada..:)
Het: Good for u. So long as u r not addicted to mumbai,u r better off wherever u are.
Keshi:***if not a home of my own, atleast I have my sanity in tact :)
-Hold on to it while it lasts ;)
Mine is hanging by a thread.
My view is that you should buy a house.. even if its Sanpada..
And hope that Sanpada appreciates more than Bandra.. So that someday you could move to Bandra. When you have the money and /or have sold off your Sanpada house at a profit..
Sanpada is just an example.. It could be Thane ? Vashi ? Wherever you can afford.
There will be small corrections in property prices but I do not see a collapse unless there is a war..
So buy something soon..
If you want to be in finance / accounting.. then you have to be in Mumbai !! And as you said.. Mumbai is addictive..it grows on you ..
Parag:* do not see a collapse unless there is a war..
My house could collapse if there's a war in Argentina...hehheeh. Thats actually the plight of thousands of building sin Mumbai..and we are one of those folks who wont moveoutuntil that happens...so there u go!
You gotta start somewhere babes..
One has to build assets.. Either you do that or live a life of selflessness.. Saying that you do not care about worldly matters..
To me (shamlessly so) money is the best "high" I get from life..
atleast ur's is still hanging by a thread...mine crashed but it's still in tact ;-)
ALL-DA-BEST n keep the faith alive,
Keshi.
Its interesting to see where the housing market is headed.
So far there have been no regrets.
BTW, the RBI move to increase repo rates I guess is to cull that inflation (which my guess is largely driven by the oil price hike!)
Freaky economy!
*Freaky economy!
-PM is a devpt Economist and never won any election
-Prez is a nuclear scientist
-Leader of Ruling Alliance is a PFO
-Country is predominantly agri-based but exports world class *IT*
-The same states which were under droughtlast year areunder water this year
If this is not FREAKY, what else ?
If u can make it here, u can make it anywhere in the world!
agree with your last statement
"If u can make it here, u can make it anywhere in the world!"
Everyone knows that 1.2 bn Indians can pull the country apart or pull it together..
The question to ask is
WHICH WAY DID YOU PULL TODAY !!
Unsecured loan is the best option for tenants as it does not acquire any property to pledge as the collateral.You can get an unsecured loans on the basis of your credit record and your potential to repay the amount of the loan.People with Bad credit record can also apply for the loan here with relatively higher interest rates.If you are in urgent need of money and do not have sufficient assets to put as collateral then an unsecured loan is the best option for you.
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