kolkata with talk of a tighter monetary regime to rein in inflation getting louder by the minute home loan providers are somewhat jittery a large chunk of home loan players believe any tightening would force banks and housing finance companies hfcs to raise home loan rates furtherin that event borrowers especially those whove taken loans at lower rates of around 78 a few years ago may have to live with the perils of facing a condition best known as negative amortisation in financial jargonsimply put negative amortisation is a situation when repayment of loans does not cover the amount of interest due for that particular loan period this ultimately leads to a default borrowers with longer repayment periods face such problems when interest rates keep increasing over the yearsweve encountered such situations last year when interest rates rose more than once in a short period said a senior official with a prominent hfc this typically happens when the tenure of a loan is 20 years or moreloans with a 20year repayment period should be restricted and be allowed if an income installment ratio iir is not more than 3035 when the iir is low there can be room for increasing the emi to cover any rise in interest rate increase said dhfl vysya housing finance managing director r nambirajantypically home loan rates are now hovering between 95125 industry watchers believe every rise in rates from here on will make loan repayment a lot more strenuous with the extended loan tenure monetary measures like a crr hike would certainly push the home loan rates upward felt gic housing finance vicepresident rajib dea good number of bankers and bond traders anticipate a crr hike to the extent of 50 bps from the current level of 75 a senior official at hdfc said with inflation on the higher side it is likely to push interest rates up we are waiting for rbi to unveil its monetory policy before we take a call on home loan interest rate movements and hfcs which borrow funds from commercial banks would typically be on a disadvantageous position barring just a few banks most have not reduced their prime lending rates despite repeated prodding by the finance minister therefore cost of funds for most hfcs are already at a higher range of 910 another hfc official indicated