Home Loans are expensive, but why the interest on FDs is low? | How will the dream of studying abroad come true?

 

Today we will talk about inflation in this article, which affects our children's education, home’s EMI, and also our savings. 

Homes are about to get expensive?

Inflation may become a problem in the coming days for the real estate which has made a strong comeback in the Corona period. Steel cement has increased the cost of construction for some time now, but now the demand and EMI are also ready to harass the home buyers. It is estimated that this year the prices of houses may increase by 7.5%, which will be the biggest increase in five years.

Whereas in March, house prices were estimated to increase by 5%. House prices are expected to increase by 6% in 2012 and 2012. Experts believe that due to the lesser effect of a crowd and the opening of office schools, the demand for property will increase sales. This will put pressure on the supply and increase the prices.

Input cost is limited scale construction material. Due to the increase in their prices, the prices of houses have increased. I believe that we should not concretely look at this because looking at the good GDP growth, employment, and western overall economic scenario stood. The demand for housing will increase even after the prices of houses.

Along with this, the rising cost of construction and the increase in EMI will also be heavy on the pockets of first-time home buyers. It is estimated that buying a house will be cheaper only for the next 2 to 3 quarters. In the next two years, the affordability of houses is expected to decrease significantly. A 1%  increase in home loans reduces affordability by up to 7%.

In such a situation, if the repo rate crosses 6%, then the pace of real estate may once again slow down. That is, due to the increase in the price of houses, developers will not get much benefit. On the contrary, if this trend continues, then again the situation here may become critical.

Steel cement labor increased significantly due to the input cost of a car, then its direct impact came at a realistic price and it also saw an increase in prices around 8 to 10%, but that too was absorbed by the market. Container's demand remains the same. Looking at this, it seems that in the coming two years, we will see an increase of 5%  in our prices, and demand will continue to be cut.

There is also a significant increase in the construction cost because of course the cost of things like material living has increased a lot, so I believe that in the coming time only due to good growth in this sector. According to the trend of increase in the prices of the houses of the country. The two largest real estate markets i.e. Mumbai Metropolitan Region and Delhi NCR are expected to grow by 4 to 5%.

Whereas in Bengaluru and Chennai, house prices may increase by 5.5 to 6.5% in the next two years. In such a situation, it remains to be seen whether this inflation is a temporary phase or will it affect the health of the real estate market in the long term.

Why the interest rate on FDs is low?

Bank FDs have always been at the top of the traditional and safe investment options. Till the 90s, every investor preferred to keep their deposits in bank FDs only. For the last 20-25 years, along with investment options related to the stock market, other investment options have also made their place in the hearts of people, but till now no other option has reached near bank FD on the foot of popularity.

Even though there has not been any decrease in their popularity so far, now they are lagging in terms of giving returns. Inflation, which has reached close to 8%, has brought the returns from them to below zero i.e. negative. If you look at SBI's average, then you are getting 4.4% interest on 6 months FD, 5.10% on 1 to 3-year FD, 5.3% on 3 to 5-year FD, and 5.40% on 5 to 10-year FD.

For the past few years, interest rates have been coming down. Also, in the coming months, despite the RBI increasing the repo rate, their rate is not expected to increase significantly. Anyway, banks increase the interest rates of loans immediately but often delay in paying more interest on FDs. SBI has not increased the interest for FDs of less than 2 crores, despite increasing the loan rate by 20 basis points.

ICICI Bank has increased FD rates by 20 basis points, while it has increased SBI by 20 basis points. The same HDFC bank has increased FD rates by 20 basis points, while MCLR has increased by 30 to 20 basis points. It is clear from these decisions of these three major banks of the country that there will be a delay in increasing the FD rates.

In the name of increasing the rate of FD, the bank is increasing the interest rate on FDs of more than three years or a large amount. That is, only FDs of 2 crores or more are getting more interest. The reason for not increasing the interest on FD is that banks already have enough cash. Similarly, there is no dearth of liquidity in the market.

Therefore, banks do not want to increase their cost by making more FDs. During all these circumstances, the customer can get relief in the coming days. When RBI will gradually increase the repo rate by 1.5%. With this increase in FD interest rates, inflation will also be controlled.

How will the dream of studying abroad come true?

These days the craze of going abroad for higher education has increased very fast. A significant number of Indian students are arriving from Canada to Russia and Australia. Most students want to make a great career by pursuing higher education abroad, but getting education abroad is not that easy either. The biggest problem with this is education fee.

If you also want to educate your children abroad and money is coming your way, then there is a way to overcome it. It is easy to get an education loan if you have taken admitted to a recognized college or university in India or abroad for higher education. You can get a loan of up to 1.5 crore rupees from the bank for studies abroad. The interest on which generally ranges from 6.80 to 14%. 

An education loan is much cheaper than compared to a personal loan. However, depending on the course and educational institutions, the bank determines the interest rate. Generally, the repayment starts six months after the completion of the course, but in case of non-availability of a job, the bank gives a time of up to one year for the repayment. 

Compare interest rates from different lenders while selecting a bank for an education loan. You can also take a loan from a non-banking finance company. Through comparison, you will be able to understand which bank is the cheapest to sit in.