115498Landlords gain from rental yield increase, tenants’ budget gets spoiled!

Home loan EMIs for affordable housing costing less than Rs 40 lakh have risen by almost 20% in the last two years, real estate consultant Anarock has said in a report. The report said affordable housing segment has been the worst hit during covid and its aftermath and has still not recovered. The floating interest rates for home loans up to Rs 30 lakh have risen from 6.7 per cent in mid-2021 to nearly 9.15 per cent now.

“Home loan borrowers who were paying an EMI of approx. Rs 22,700 in July 2021 are now paying about Rs 27,300 today — an increase of approx. Rs 4,600 per month. This 20 per cent increase in the EMI has resulted in a jump of approx. Rs 11 lakh in the overall interest component – from approx. Rs 24.5 lakh interest payable in 2021 to approx. Rs 35.5 lakh today,” Anarock Head-Research Prashant Thakur said.

According to analysts, the total interest paid over a 20-year loan tenure is now more than the principal amount.
“If a buyer seeks to buy a property worth less than Rs 40 lakh, factoring in the LTV (Loan to value) ratio, the total borrowed amount is Rs 30 lakh for a tenure of 20 years. In this scenario, the buyer would have paid an EMI of Rs 22,700 in 2021, when the interest rates stood at approx 6.7 per cent,” Thakur said.
At this rate, the total repayment to the bank was around Rs 54.5 lakh, of which the interest component was about Rs 24.5 lakh – less than the total principal amount, he added.

Anarock said that the share of affordable housing in overall sales in H1 2023 shrunk to 20 per cent. Likewise, in the top 7 cities, this segment’s share in the overall housing supply in H1 2023 plunged to 18 per cent against 23 per cent in H1 2022.