Let the party begin. BoooYaaah. Loan interest rates will go back to 12-13% from 9-10% a jump of 20%. Expect EMI's to rise by greater then 20%. Borrowing costs for builders will jump too and they will want to pass this to the customer, thereby forcing a further decline in affordability. There are no political compulsions for the government to keep rates low. They will use the next few years to reverse the bogus interest policy implemented by the supposedly independent RBI over the past few years. I feel sorry for speculators in Mumbai as the crash in stock markets is going to resonate loudly in the real estate sector. Be very careful of under construction projects. They will hold the biggest risk to the buyer.
By V. Ramakrishnan and Anil Varma
Feb. 1 (Bloomberg) -- India’s swap rates will surge as the central bank increases the benchmark borrowing costs by a record 1.5 percentage points this year to curb inflation, Morgan Stanley said.
The cost of swaps that mature in a year will rise 0.52 percentage point to 5.5 percent by April, Morgan Stanley India Primary Dealer Pvt. Ltd. said. Reserve Bank of India Governor Duvvuri Subbarao on Jan. 29 estimated wholesale-price gains will quicken to 8.5 percent by March from as little as 0.5 percent in September. He also raised reserve requirements for banks and said interest rates will increase “in future.”
“Inflation is becoming a bigger worry and that sets the tone for higher interest rates going forward,” Manoj Swain, Chief Executive Officer at Mumbai-based Morgan Stanley India Primary Dealer, said in an interview. “Upward pressure on swaps will increase because of the rising requirement to hedge against higher rates and tighter liquidity.”
Read more here
By V. Ramakrishnan and Anil Varma
Feb. 1 (Bloomberg) -- India’s swap rates will surge as the central bank increases the benchmark borrowing costs by a record 1.5 percentage points this year to curb inflation, Morgan Stanley said.
The cost of swaps that mature in a year will rise 0.52 percentage point to 5.5 percent by April, Morgan Stanley India Primary Dealer Pvt. Ltd. said. Reserve Bank of India Governor Duvvuri Subbarao on Jan. 29 estimated wholesale-price gains will quicken to 8.5 percent by March from as little as 0.5 percent in September. He also raised reserve requirements for banks and said interest rates will increase “in future.”
“Inflation is becoming a bigger worry and that sets the tone for higher interest rates going forward,” Manoj Swain, Chief Executive Officer at Mumbai-based Morgan Stanley India Primary Dealer, said in an interview. “Upward pressure on swaps will increase because of the rising requirement to hedge against higher rates and tighter liquidity.”
Read more here
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