Yet another increase in lending rates by the Reserve Bank of India (RBI) has also caused an unprecedented increase in mortgage lending rates. Buying a house has become more expensive. Private banks HDFC and ICICI have raised rates by 75 basis points (100 basis points = 1%). This is the third consecutive rise in interest rates this year. On average, home loans have become more expensive by 2% this year compared to 2007.
Properties in India have been affected by many factors. The global recession had hit the real estate segment hard. Property prices across the country have stagnated. This is the first such case in the last five years when property prices have stabilized. Otherwise, real estate prices in all segments rose steadily. Property demand had taken off like never before. Furthermore, property seekers and investors were investing heavily in the real estate segment. Anyone with few funds to spare found it profitable and profitable to invest in property. At the time, investors were neglecting other investment instruments like mutual funds, stocks, and stocks.
Affordable home loan rates and easy repayment options, such as EMIs, had lured many home buyers to consider loans from banks and financial institutions.
The scenario has changed now. Borrowing funds from banks has become an expensive preposition. Building material costs are rising. As a result, private property developers have hinted that they will raise the prices of real estate projects. These market conditions are dissuading investors from investing in the real estate segment. Home seekers are also expecting market conditions to improve. As a result, the number of real estate transactions has decreased. Real estate brokers, builders and home seekers expect better times to come.
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