Rising interest rates have less impact on home loans

Increasing interest have less impact on housing finance, whereas from the first quarter of the previous fiscal year borrowing rates have increased by 21percent on the other hand rates have gone up by approx 300 basis points in the same period. Though in the several tier-I and tier-II towns property prices have been comparatively reduced.
As per the Reserve Bank of India’s fresh reports, by the end of August 2011 commercial banks have raised their home loan rates by 21% since March 2010. In the current financial year home loans have contributed huge growth to banks credit till now.
However, overall banks have risen to 20.2% till the 26 August 2011 comparatively 19.3% in the previous fiscal year. Even home loans rose 15.3% in the same period compared to 10.9% in the previous period. The RBI has raised its key policy rates by 300 basis points (one basis point is 0.01%) in the same period.
As in the current scenario the ratio of the borrowings are based on floating rates, so whenever borrowing rates change the equated monthly installments (EMI) also change but the tenure changes accordingly.