Mumbai: Vishal Jain, a 36-year-old media professional is in a reflective mood - a sign of desperate times if you are a large home loan consumer.
One year ago, Vishal took possession of a two-bedroom flat, but now he is busy calculating his increasing liability.
In January last year, Vishal took a Rs 28 lakh loan from ICICI Bank, at a 7.25 per cent rate of interest. The EMI amounted to Rs 22,161.
But successive rate hikes, amounting to 200 basis points, has increased the tenure of his home loan by two years and raised his EMI by over Rs 2,600.
"Real estate prices have already gone up in Mumbai. If the rates keep going up, people will be forced to rent rather than buy a house," says he.
A rising interest rate regime seems here to stay at least for the time being. ICICI Bank is now talking of another rate hike - the last one of 1 per cent having come into effect on February 9. But this rate hike will apply only to new customers.
The Punjab National Bank has also announced a hike.
Says Executive Director-ICICI Bank, V Vaidyanathan, "Liquidity was always a concern, but with this Cash Reserve Ratio hike, it's been tightened further. While we had announced a rate hike earlier, we clearly feel another hike is around the corner."
The low home loan rates are now a thing of the past. New customers can either pay through their noses or wait for a drop in interest rates. But for existing customers even that option no longer exists.