According to a recent research report from Crisil the rising interest rates are likely to push up the equated monthly installments (EMIs) of home loan borrowers by Rs 6,000 crore annually.
Reports said that the higher EMIs and a slowdown in economic growth will cause in the rise of non-performing assets (NPAs) of financiers. It also said that the teaser loan portfolio for which the interest rates are linked to the prevailing higher market rates will increase the profitability of financiers. The Crisil report also said that the floating interest rate for home loan borrowers has increased by around 250 basis points (bps) since April 2010 due to constant hike in key policy rates. The correspond to an average rise of 15 per cent in EMIs.
Reports from Crisil said that the RBI has increased its key policy rates to control inflation and as per its estimation, the EMIs have increased for 40 per cent of existing floating rate customers, while the remaining customers have chosen to increase their tenures or do a part payment. It said that the borrowers who are paying higher EMIs are facing an additional annual burden of around Rs 3,500 crore.
Crisil said the customers who have opted for teaser loan schemes, are still not affected by the hike in interest rates as the rates are fixed for the initial two-three years. According to the reports 25 per cent of the housing loan portfolio of Rs 5.10 lakh crore as of March 2011 comprises teaser loans.