Hearts sink as loan rate rises

Mumbai

When Ranjith Thomas, a finance executive, heard the RBI had hiked interest rates, his heart sank. His monthly outgoings for the Rs 20 lakh loan he had taken last year had just gone up from approximately Rs 16,000 to Rs 19,000.

“I don’t have vices. I cook my own food. In short, I live a simple lifestyle without being a burden to my family. What is the government trying to do by this hike? Ensure we do not have a roof over our heads post our retirement,’’ questioned Thomas, who won a flat in a lottery draw organized by the Maharashtra Housing and Area Development Authority (Mhada) in 2010.

The RBI’s move has not gone down well with existing and prospective flat buyers. “Yes, I may have a well-paying job. But, does the government realize the cost of living has increased manifold. Even though we have not taken any other loans, I have to practically shell out my entire salary of Rs 50,000 towards house maintenance and the house loan,’’ said Ritvik Shah, an executive with a marketing company in Andheri. Shah took a Rs 40-lakh loan in 2006 for the two-BHK flat.

Reena Mathias, a senior executive with a share-broking firm, on the other hand, has just dropped the idea of purchasing a flat. “I cannot afford to pay such a high rate. As such, the flat rates are too high. I would have to shell out an EMI of about Rs 40,000 for a dingy flat costing Rs 40 lakh in Thane. It’s much better to stay on rent. My monthly outgoings do not go beyond Rs 10,000,’’ said Mathias, who shares a 2-BHK with two others in Juhu.

According to Ritesh Mehta, business head of Loanmart, the RBI’s move is aimed at curbing speculation in the real estate market.

“There is a lot of liquidity in the market which is being used to invest in the real estate. The RBI has hiked the repo rate–for the 11th time since 2010–as it wants to curb inflation. But, it is not being effective at the ground level due to ancillary factors,’’ Mehta stated on Tuesday.

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