In India rising interest rates have had little impact on housing loans. Borrowings have gone up 21% since March 2010 even as rates have gone up by 3% in the same period.
Total housing loans by commercial banks rose 21% to Rs 3,64,170 crore as of end 2011, August from Rs 3,00,929 crore in 2010, March. The growth is largely coming from tier-II and tier-III centres
According to RBI;s (Reserve Bank of India) latest data, the current year, much of the growth in bank credit has been driven by home loans.
Though housing loan rates don't necessarily move at the same rate as the RBI signals, individual banks' lending may vary by some margin. It is reckoned that on an average hoousing loan rates have gone up by nearly 2-2.5%. Many banks charge 13-13.5% interest for fixed rate housing loans.
Some banks and housing finance companies are also offering products to suit customer requirements that is partially contributing to the rise in loans.
ICICI Bank and HDFC have also come out with limited period, fixed rate products. AXIS Bank launched a 20 year fixed-rate (11.75%) product as there was a demand from customers who wanted to buy homes but were scared of the constant rise in interest rates.
In recent years, most of the borrowing is on a floating-rate basis. Under this route, whenever borrowing rates change, the EMI ( Equated Monthly Instalments) also change, but the tenure changes accordingly. Customers who were worried that EMI keeps moving up and down, are now exploring fixed-rate products.
Also read
Axis Bank unveils 20 year fixed rate home loan
HDFC follows ICICI Bank, new special home loan offer
ICICI Bank announces home loan at fixed rate for one/two years
Total housing loans by commercial banks rose 21% to Rs 3,64,170 crore as of end 2011, August from Rs 3,00,929 crore in 2010, March. The growth is largely coming from tier-II and tier-III centres
According to RBI;s (Reserve Bank of India) latest data, the current year, much of the growth in bank credit has been driven by home loans.
Though housing loan rates don't necessarily move at the same rate as the RBI signals, individual banks' lending may vary by some margin. It is reckoned that on an average hoousing loan rates have gone up by nearly 2-2.5%. Many banks charge 13-13.5% interest for fixed rate housing loans.
Some banks and housing finance companies are also offering products to suit customer requirements that is partially contributing to the rise in loans.
ICICI Bank and HDFC have also come out with limited period, fixed rate products. AXIS Bank launched a 20 year fixed-rate (11.75%) product as there was a demand from customers who wanted to buy homes but were scared of the constant rise in interest rates.
Home Loan Outstanding (Rs.Crore)
Month, Year | Loan Outstanding |
August-2009 | 2,84,721 |
March-2010 | 3,00,929 |
August-2010 | 3,15,845 |
March-2011 | 3,46,110 |
August-2011 | 3,64,170 |
In recent years, most of the borrowing is on a floating-rate basis. Under this route, whenever borrowing rates change, the EMI ( Equated Monthly Instalments) also change, but the tenure changes accordingly. Customers who were worried that EMI keeps moving up and down, are now exploring fixed-rate products.
Also read
Axis Bank unveils 20 year fixed rate home loan
HDFC follows ICICI Bank, new special home loan offer
ICICI Bank announces home loan at fixed rate for one/two years
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