Rising home loan rates is already making a big impact on the lifestyle of many people who have enrolled for such loans; the rising cost of money has forced the banks to jack up their rate which has spiralled into higher monthly instalments from an individuals income.

On an average, the monthly instalment on a 20-year, Rs 10-lakh loan has gone up by 50 per cent to Rs 12,070 (13.5% interest rate) from Rs 8,060 (7.5% interest rate) five years ago. Home loan rates in India had last peaked to about 18% in 1995. Just today, one of the TV channels highlighted the plight of an individual who has taken INR 20 lakh or 20 peti (munnabhai slang) as loan, his EMI shot up from INR 20,000 to INR 25,000 with the increase in loan rates. The individual has to make amends to his lifestyle, probably cut back on weekend masti, dining out etc to stay above the water. Double income families are somewhat better off then those with single income however the double edge sword of high monthly instalments and rising cost of living is carving out a big hole into the income of many households across the country.

This increase in rates is worsened by the fact that house prices in metros like Mumbai and Delhi are slowly inching towards a beyond -the-reach mark for most middle class families, for instance, a friend of mine working as a senior consultant within a leading IT firm is in the market for a 2 bedroom house in one of the Mumbai suburbs (goregaon, to be precise), the going rates are no less than 70 lacs, which is a hefty amount even for my friend who enjoys a handsome salary. If my friend is whining at such prices, it’s a dreadful thought to think of large number of individuals with average salary trying to buy a property in metro cities

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