Click to play videoNew Delhi: A day after RBI raised lending rates, ICICI has become the first bank to raise home loan rates. The effective rate for a home loan has now gone up three per cent in less than a year.
Meet Premanand Mishra a resident of Delhi. He is now a worried man. He had taken a home loan on a floating interest rate in February and was confident he would pay the EMI comfortably.
But on Friday the RBI announced yet another hike in the repo rate and the cash reserve ratio, causing a rise in interest rate on consumer loans.
The RBI says the move was necessary to control inflation, but Premanand feels consumers like him are still suffering.
Mishra says, “We are worried it's depressing. We have already started planning how we can deal with this and how we're going to be able to pay the EMI.”
And the home loan rates going up is not just getting the consumer worried, it's also causing builders some sleepless nights.
Property developers fear that rising interest rates are discouraging investment in the sector.
SPS Builders Marketing Manager Sanjay Mishra said, “investors kam ho gaye hai or jo do flat lete the wo ab nahi le rahe hai (Number of investors has gone down but genuine consumers still continue to buy flats.)
The RBI's move means less lendable money with banks and so a rise in interest rate.
Some of India's leading consumer loan retailers have confirmed that the last interest rate hike in February caused a 15-20 per cent drop in the number of consumers opting for loans.
With prices of essential items still to be controlled, people like Premanand are wondering whether it's a lose-lose situation all the way.
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