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"high Interest Rates May Hit Housing Sector"

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High interest rates may hit housing sector

Saturday June 17 2006 13:54 IST

KOCHI: High bank interest rates effected by the Reserve Bank of India to rein in possible high rate of inflation triggered by the galloping oil prices, is likely to have a telling impact on the booming construction industry in the state.
Home loans are among the first bank products to witness a rise in interest rates.
The decision of the RBI will push up interest rates of housing loans from the present 4 per cent to 9 - 9.5 per cent. Apart from this, customers will have to pay 12 per cent taxes under various heads.
This high cost of funds will adversely affect those who avail of loans. By the time they complete the repayment of the loan after 10 to 15 years, they would have paid three to four times the principal amount.
"This will affect the purchasing power of a major section of potential customers bringing the present construction spree to a halt. The housing sector should be bailed out from this crisis by loans offered at 4 percent on a special status basis," said Gokulam Venugopal, a leading builder in Kochi.

Once Gordon concedes that the UK is also experiencing inflation our IR will have to rise also. My bet is that Gordon will have to order the BoE to take action before the end of summer.

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Hey RB, why the long face?



EDIT: That's better...

I have put on my Polarbear suit as I think the market is cooling rapidly and I need to be fully prepared for the chill that is coming down.


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  • 302 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?

      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%

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