NEW DELHI: Affordable home buyers have been paying almost 20% more in their EMIs over the last two years, according to a report by ANAROCK. The report says that during the last two years, the floating interest rates for home loans up to Rs 30 lakh have jumped up from 6.7% in mid-2021 to nearly 9.15% today.
This has resulted in the share of affordable housing in overall sales in H1 2023 shrunk to approx. 20%, an 11% decrease against the corresponding period in 2022. The report further says that in the top 7 cities, this segment's share in the overall housing supply in H1 2023 plunged to 18%, against 23% a year ago.
Prashant Thakur, Regional Director & Head – Research, ANAROCK Group, says, “Home loan borrowers who were paying an EMI of approx. Rs 22,700 in July 2021 are now paying around Rs 27,300 today, an increase of Rs 4,600 per month. This 20% increase in the EMI has resulted in a jump of approx. Rs 11 lakh in the overall interest component, from around Rs 24.5 lakh interest payable in 2021 to Rs 35.5 lakh today.”
The report further says that the total interest payable over a 20-year tenure is now more than the principal amount. If a buyer seeks to buy a property below 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%.
“At this rate, the total repayment to the bank was around Rs 54.5 lakh, of which the interest component was around Rs 24.5 lakh, less than the total principal amount,” says Thakur.
He added that today, when home loan interest rates hover at around 9.15%, this buyer's EMI is approx. Rs 27,300. The total repayment to the bank at this rate is now approx. INR 65.5 lakh, of which the interest component will be approx. INR 35.5 lakh - more than the total principal amount.
According to the latest ANAROCK Research, the total sales share of affordable homes went down to approx. 20% in H1 2023, against 31% in the corresponding period in 2022.
Of approx. 2.29 lakh units sold across the top 7 cities in H1 2023, just 20% or 46,650 units were affordable homes. Back in H1 2022, of 1.84 lakh units sold, over 31% or 57,060 units were in the affordable category.