As the central bank fights inflation, further monetary action is possible, which might make owning a home a distant dream for many Indians.According to brokers, the real estate sector would remain bullish this year because of rising input costs.Interest rates onhome loanin India are set to go up as the country's central bank recently hiked its lending and borrowing rates by 25 basis points.His loan has gone up by three percent but his income has not risen much.But those who took home loans around five years ago are paying over 12 percent, following successive rate hikes. Slowly inflation went up and interest rates too went up.After the central bank's monetary policy tightening last November, most banks had hiked their interest rates by around a quarter percent."Ms Reshmi Bhaskaran said: "You want to maintain a certain quality of life, but when there is cost involved, it is very difficult.Mr Ravi booked a flat with the Delhi Development Authority two years ago, for which he took a home loan of about US$55,000.Land costs at some prime metro locations have crossed even the pre-global crisis peak levels.Mr Ravi said: "The slump happened.Interest rates on home loans are on an upswing in India.5 percent."Soon more people like Mr Ravi will be shelling out extra money on their equated monthly instalments.With the global downturn and rising costs, though, much has changed in these last two years. There is clearly an upward bias in interest rates.Chanda Kochhar, managing director and CEO of ICICI Bank, said: "The deposit and lending rate increase depends on how the cost of fund is moving and how the supply and demand of money are moving.This has forced many home buyers to postpone their plans as they rework their monthly budget."Along with interest rates, property prices too remain high.At present, many banks lend at close to 9.This will affect the budgets of families already battered by high inflation. Housing sector and everything was in trouble. We ended up paying in six months to a year around 12..But the dream is slowly turning sour for the Delhi-based social researchers.Moving into their own home after 10 years was a dream comes true for Mr Ravindranathan and his wife Ms Reshmi. In that sense, the cost of deposit is going up.This time too the RBI has hiked its key policy rates to contain soaring inflation and banks are expected to soon revise their lending and deposit rates. I don't know how long we can go on like this.5 percent interest rate to new borrowers. You either have to ignore or close your eyes towards many things you want to enjoy.He says 70 percent of his and his wife's salary goes towards repaying the loan, leaving little for their household budget.
