Many enthusiasts who had made plans to buy either a home or a car might have to put off them as banks are likely to make loans further expensive.
The festive season is round the corner but the hike in interest rates announced by the RBI on Tuesday may dampen the spirit of auto and home buyers. Many enthusiasts who had made plans to buy either a home or a car might have to put off them as banks are likely to make loans further expensive.
The cost of cars or houses may not increase directly, but borrowing will become costlier as one has to pay more EMIs or higher number of EMIs, believe automobile and real estate industries. “There is going to be some impact on an already stable but cooling market,” said Dipak Kothari, joint secretary of CREDAI.
He added that any increase in loan rates is going to affect the demand, especially those projects where new bookings are done on pre-qualification of loan sanctions.
The demand from middle income group (MIG) category is going to take a beating in an environment of rising interest rate. “Some buyers may have to reconsider the size of the property they are seeking; some will reconsider the location of the same. This review will keep some demand alive. However, new project booking may get affected in coming days,” Kothari said.
The hike will have negative impact on MIG and LIG (lower income group) also. “Because of EMI having been increased by 1.5 times in last one year, for MIG and LIG, buying a house has become more difficult. The central government should announce some special incentive schemes in interest rates for this segment,” said chairman of rurban committee, Gujarat Chamber of Commerce and Industry, Vijay Shah.
P Balendran, vice president, General Motors India, is afraid of another hike in September after the 50 basis points (pbs) hike in repo and reverse repo rate by RBI on Tuesday. “In 2010, car sales in India grew by 30% and General Motors witnessed growth of 60%. Till now, due to consecutive hike in interest rates and rise in fuel prices, I had expected industry sales to grow by 14%. But now, after another hike in interest rates by RBI, I am expecting automobile sales to be around 12%,” he said. The vice president added that even they have reduced targets to 30% growth against 60% in last year.
The demand for sub-Rs5 lakh car is also expected to go down. “People buying cars priced below Rs5 lakh usually take a loan. This which makes the interest rate hike a pivotal issue,” said Ravi Suri, president, Cargo Motors Pvt Ltd.
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
)
){kind=small}
){kind=small}
)
)
)
)
)
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}