The Hindu : Tamil Nadu News : Middle class maladies

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Tuesday, Aug 12, 2008
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Tamil Nadu

Tamil Nadu

Middle class maladies

Vidya Venkat

M. Vellaipandi and his wife, living in suburban Chennai, can’t even rejoice about the recent birth of their son.

They are plagued by the worries that have currently gripped middle-class families — the interest hike on home loans. “When I started paying EMI on my home loan of Rs. 12 lakh, it was Rs. 8,500. Now, it is Rs. 11, 000,” he says.

A year ago, the loan provider also increased the repayment period from 20 years to 25 years. “It is a feeling close to sinking,” he says. “I took a personal loan four months ago to manage the increase in household expenses. My wife’s pregnancy and my first daughter’s education cost me a lot. Even the price of rice has gone up significantly. How does one survive?” he asks.

Loan defaults

Vellaipandi never used to default on repayment. But, he did so last month despite earning close to Rs. 5 lakh a year. And, the defaulter fee? Rs. 1,000.

Similar tales abound in other middle class families who have taken home loans.

S. Padma, a BPO employee, purchased a house in Velachery three years ago. But, the increase in EMI and repayment period has been a constant source of worry.

“I don’t think I will do any shopping this Diwali with my bonus. Looks like I will have to use the entire amount for repaying a part of my loan.”

Inflation has eaten into her savings and these days, Padma says she thinks twice before spending on anything — including occasional visits to the theatre or the beauty parlour.

The steady hike in interest rates and rising inflation are forcing several people to rethink their decision of buying a home.

Says G. Daniel, an IT employee, “Learning from the experience of friends who struggle to cope with increased interest rates, I have decided not to buy a home yet,” he says.

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