Last week, I happened to meet a friend who had switched a job recently . He told me that the he switched the job as his take home pay couldn't catch up with increasing E(D)MIs. There are lot of people who are suffering from this syndrome as a result of the recent rate hikes in interest rates.
Most of the salaried middle class would agree to EMI being renamed to DMI ( Difficult to pay Monthly Installments) .
Lot of people have started blaming the government and banks for this. I wouldn't say the government is to be blamed totally. Just a few months back , we had seen people in a tearing hurry booking their flats . Easy loans and buyer's greed fuelled the real estate prices. Interest rates were also relatively low. With RBI raising the repo rates, lot of those who got a loan on floating rate basis are badly affected. A home is a basic necessity but pledging future earning of 10-15 years for just a loan doesn't make real sense. May be this is because in India , most of us like to hold assets in a physical form.
We will have to make proper calculations before we take any own or rent decision. We should also consider factors like inflation, wage rate increase, economic cycles before we take important decisions like the amount of EMI that we can afford.(In this context happened to see an article on own or rent a car in ET which made a lot of sense. )
Any financial decision ( esp long term ones like a house loan) has to be taken after a thorough analysis and understanding of factors involved. Else, we may have to suffer.
For those of them who are already committed to a loan there are a few options left. They can either try to increase their earnings (if possible), Cut down on other wasteful expenditure or make a bold decision to get of with the asset obtained through loan. If none of the above is possible ... keep your fingers crossed ..waiting for the interest rates to move southward.