Your home loan EMIs have shot up 20% in the last two years. Check details
In the Indian residential real estate market, affordable housing suffered the greatest impact of the Covid-19 pandemic — and unlike the other segments, has not recovered in the last two years. With buyers of this segment increasingly desisting from purchase decisions, affordable housing sales are languishing, and developers have accordingly curtailed its supply.
A recent report by ANAROCK finds that the share of affordable housing in overall sales in H1 2023 shrunk to approx. 20% — an 11% decrease against the corresponding period in 2022. Likewise, in the top 7 cities, this segment's share in the overall housing supply in H1 2023 plunged to 18%, against 23% in H1 2022.
The mounting desolation is not helped by the fact that affordable home buyers have been paying almost 20% more in their EMIs over the last two years. The floating interest rates for home loans up to ₹30 lakh have jumped up from 6.7% in mid-2021 to nearly 9.15% today.
“Home loan borrowers who were paying an EMI of approx. ₹22,700 in July 2021 are now paying approx. ₹27,300 today — an increase of approx. ₹4,600 per month. This 20% increase in the EMI has resulted in a jump of approx. ₹11 lakh in the overall interest component — from approx. ₹24.5 lakh interest payable in 2021 to approx. ₹35.5 lakh today, " said Prashant Thakur, Regional Director & Head – Research, ANAROCK Group.
The total interest payable over a 20-year tenure is now more than the principal amount. If a buyer seeks to buy a property worth ₹40 lakh, factoring in the LTV (Loan to value) ratio, the total borrowed amount is ₹30 lakh for a tenure of 20 years. In this scenario, the buyer would have paid ₹22,700 in 2021, when the interest rates stood at approx. 6.7%.
“At this rate, the total
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