A research report by Crisil states that the raising interest rates would result in increased equated monthly installments (EMI) of home loan borrowers of about Rs.6000 crore annually. This increase in EMIs coupled with slowdown in economic growth would lead to increased nonperforming assets (NPAs) of the lenders. The uninterrupted hike in policy rates since April, 2010 has increased the interest rates of housing loans under floating category by 250 basis points. This corresponds to an average increase of 15 per cent in EMIs.
According to the report, the EMIs for 40 per cent of the current floating customers have increase whereas some of the remaining customers have chose to extend their period of repayment and some others have planned to pay a part of it. It has been estimated that the customers paying higher EMIs will have an additional burden of about Rs.3000 crore.
Crisil in its report also states that about 25 per cent of the housing loan portfolio is comprised of teaser loans. With increase in interest rates according to the existing market rates the EMIs would increase to about Rs.2,000 to 2,500 crore annually. Further, it would increase the net profitability margins of the lenders by 30 basis points in FY 2012 – 13.