Rising interest rates on home loans due to series of rate hikes by the banks will put an additional annual burden of Rs 6000 crore on home loan borrowers said the report released by the rating firm CRISIL.
“The increase in equated monthly installments (EMIs), due to rising interest rates and reset of a large number of teaser loans, will put additional annual burden of about R6000 crore on home loan borrowers,” said the report.
Higher EMIs and a slowdown in economic growth would also result in higher non-performing assets (NPAs) for financiers. The Reserve Bank of India has hiked key policy rates 12 times in the past 18 months. Floating interest rate for home loan borrowers has been increased by 250 basis points since April 2010 due to continuous increase in key policy rates which corresponds to an average increase of 15% in EMIs.
Customers who had opted for teasers loans will face the pinch form April 2012. According to the report, 25% of the housing loan portfolio of R5,100 billion as of March 2011 comprises teaser loans. “Once interest rates get reset to prevailing market rates (from April 2012), we estimate an additional EMI burden of Rs 2000-2500 crore annually on this account,” said Prasad Koparkar, head-industry and customised research, CRISIL Research.