There is an assumption that interest rate on home loans will further increase by half a percentage point as per Reserve Bank of India. That means the floating interest rate on home loans will become around 10%. This will affect the real estate buyers as buying a home won't be an easy task now. But, bankers still feel that switching over to fixed rate won't be a good option as the present fixed rate is 11% and apart from this one will have to pay a fee of 1.75% of the outstanding amount. And not only this if one chooses a fixed rate, he will be locked in for the remaining repayment period to such a high rate.
The market perception says that interest rate will become moderate soon in the near future and if they do then buying at floating rate will be the best option.
Any further increase in the interest rate will affect the demand rate in real estate sector. There are lots of property developments in the country by big builders wherein they provide all modern facilities. So people now days prefer to take home loan rather than shelling out the whole money in one go.
The increase rate by half a percentage won't affect the existing buyers, as the new rates are applicable from October.
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