DalalStreet.Biz has a calculation of how rising interest rates by the RBI has raised the EMIs of Indian home loan borrowers.
Loan Amount: Rs 25,00,000
Inception Jan – 1 – 2004
Floating Rate @ inception – 7%
Tenure of the Loan – 20 years
EMI at inception Rs 19,400
Since Jan-1-2004, the Indian central bank, Reserve Bank of India has hiked the interest rates 6 times. The table below shows how your EMI has shot up by 26% in 3 years.
Jan-2005, Interest Rate 7.5% EMI Rs 20,100
July-2005, Interest Rate 8.0% EMI Rs 20,800
Jan-2006, Interest Rate 8.5% EMI Rs 21,600
April-2006, Interest Rate 9.0% EMI Rs 22,300
July-2006, Interest Rate 9.5% EMI Rs 23,000
Feb-2007, Interest Rate 10.5% EMI Rs 24,500
Plus their is a blood sucking Service Tax on the part of interest paid to the bank.
Sure, our Real Estate Sector is headed for a trouble now.