The Reserve Bank of India has increased the policy interest rates by 1.90 percent since May this year to control the high inflation rate. At the same time, rates are also expected to increase in the next quarterly review.
Up to 21% increase in EMI possible
According to rating agency Icra, the direct effect of further increase in repo rates in the coming times will now be visible on EMI only. Because the scope for extending the loan tenure with banks has become very less. That is, it is clear that in the coming times, banks will focus only on increasing the EMI of the people. Actually, with the increase in loan rates, banks have two options, one is an increase in EMI and the other is an increase in the loan tenure. Sometimes banks extend the loan tenure instead of EMI. However, if Icra is to be believed, with the ongoing growth phase for some time now, this option has become limited and banks will now insist on increasing the EMI. However, the report also said that there are indications that the repayment of loans by home loan borrowers is unlikely to be affected despite the increase in monthly installments. That is, according to the estimate, customers will continue to pay their installments on time.
Rates may increase by up to 21 percent
According to rating agency Icra, there is less scope for home loan lenders to extend the loan tenure. The core home loan segment already has a longer installment repayment tenure and once this period is extended, it is likely that it will exceed the total life of the borrower. ICRA’s financial sector rating head Manushree Sagar said that due to this, the monthly installments (EMIs) for home loans will increase by 12 to 21 percent. At the same time, in the case of affordable housing loan segment, it can increase by eight to 13 percent.
There is a possibility of further increase in interest rates, he said. Therefore, the lenders have limited scope to extend the loan tenure, due to which the amount of EMI will have to be increased and changed. However, this is unlikely to have a significant impact on the asset quality indicators of HFCs.
Loans may become costlier by 1.9 percent from May
The Reserve Bank of India has increased the policy interest rates by 1.90 percent since May this year to control the high inflation rate. This has also led to an increase in the rates paid by the borrowers. At the same time, an increase of up to half a percent has already been given in the review of the December quarter. In such a situation, banks are assuming that in December-January there will be another round of rate hike.
: Language Inputs