Home Loan: Despite increasing interest rates, banks 'home loan' arrears doubled in five years

The RBI has increased the interest rates by 1.40 per cent in the first five months of the current financial year, due to which the interest rate applicable on home loans has also increased. 

The housing loan outstanding of banks has almost doubled to Rs 16.85 lakh crore in the last five years. The RBI has increased the interest rates by 1.40 per cent in the first five months of the current financial year, due to which the interest rate applicable on home loans has also increased. Despite this, there has been a double digit increase in the home loan arrears of banks during this period. Banks' housing loan outstanding stood at Rs 8,60,086 crore at the end of 2016-17.

Looking at the future prospects, the decision to buy a house is made

Banking and real estate industry experts say interest rates do matter but they do not affect a home buyer's decision. The reason for this is that the decision to buy a house is made by an individual considering his current income and future prospects. Apart from this, people have also come to understand that the interest rates will fluctuate during the loan tenure of usually 15 years. 

Housing loan has increased

RBI data shows that the home loan arrears of banks have increased every month from 13.7 to 16.4 per cent on a year-on-year basis during the first five months of the current financial year. This increased to Rs 17.85 lakh crore at the end of August 2022.

Interest rates will keep fluctuating

According to HT Solanki, General Manager, Mortgage and Other Retail Assets, Bank of Baroda, home loans tend to last for a long time and customers know that interest rates will fluctuate during this period. By the way, even with an increase of eight to 12 percent in the average income in the country, the effect of increase in interest rates gets reduced to some extent. 

There will be no impact on the demand for home loan

HDFC Managing Director Renu Sood Karnad said, “I don't think the increase in interest rates will have any significant impact on the demand for housing loans. Unlike other products, the purchase of housing is done in a planned and well thought out manner within the family.