A roof over the head does give security -- if it's your own. But taking on debt to fund that roof? In these times?
I’M BUYING a house.’ That’s my friend who, like me, would shudder at the prospect of using a credit card, leave alone taking a home loan. He’s not even looking at one of those EWS (economically weaker section) houses. The one he has in mind is worth Rs 24 lakh–a sizeable multiple of his salary. And his reasons are hardly original: the taxes and the rent I pay will get converted into a monthly instalment, though I could suffer for 15 to 18 months till I get possession. He reminds me of another friend, who just six months ago, moved from Mumbai to New Delhi, more specifically from a rented place in Bandra to a posh Rs 50 lakh apartment south of New Delhi. "I save taxes, I save on rent..." went the predictable argument, when I questioned her courage to take on such a huge loan.
They are not alone. If data is to be believed, amid the job losses and the recession and the business uncertainty and industrial slowdown, the one sector that has done well is housing finance. At a growth rate of about 35 per cent last year and an expected 50 per cent this year, this is one industry that seems oblivious of and untouched by the R-word plaguing the rest of India–from farmers and workers to entrepreneurs and bankers. As an industry, it is probably one of the safest in the financial sector-–individual households with so much of their wealth at stake in a single asset are least likely to default. Compare that to the Rs 75,000 crore of financial assets stuck with corporations, for which a new ordinance has had to be introduced. But I’m not interested in the profits or losses of companies.
Opinion in Outlook Money