Should you buy a house amidst rising interest rates?

Home buyers who have seen record low home loan interest rates during the pandemic are concerned about their rising EMIs amid the RBI increasing interest rates. The RBI had cut interest rates from 5.15% when the pandemic hit to as low as 4%. Since May this year, the RBI has raised the repo rate by 140 basis points (basis point is 1/100th of 1%) and the rates are expected to increase further. Anuj Puri, Chairman - ANAROCK Group sees another 50 to 100 basis point increase in interest rate before the taming of inflation happens. This will pass on to the home loans, Puri adds, thereby increasing their EMIs. "For every 0.5% increase in home loan rate, the EMI increases by about 5%." However, Puri discusses ways to ease the EMIs if they are hitting hard on buyers' pockets. Also, given the beginning of the festive season, many developers will roll out freebies and offers for buyers.While he does not see buyers reducing the sale price, he believes most of the offers would be around lowering the EMIs or absorbing the increasing interest rates by the developers for some time. 

For those sitting at the fence line to buy a house, Puri suggests that they should look at it with some urgency as the prices of homes are set to increase due to rising input cost and interest cost for the developers. Ultimately, the developers are going to pass on the same to the buyers.