The Sky has started to fall

i feel like bitching about the current status of the economy today

The last ten- twenty days have been pretty eventful ...what with the international summit on oil prices,more evidence of a global slowdown, increase in interest rates and the tanking of the fundamentally strong indian growth story...Guess the reality stocks and Banking stocks were the most affected...

whatever...My line of thoughts started with this small EMI calculator provided in QVCs website ...(a pretty useful one)

http://www.qvcrealty.com/resources/index.html...a pretty cool resource for calculating home loans....and repayment schedules..

My line of thought flew like this ...Let us assume I take a home loan worth Rs 35,00,000 from a bank at 11 percent (the current interest rate)for a duration of 15 years...My monthly EMI falls around Rs 37,000 per month for the next fifteen years...(I for one would be daunted by the nature of this recurrent payment)

Let us assume that an average software-engineer cum houseowner has taken this liability...he will have to pay about Rs 37,000 every year for the rest of his productive life to repay this loan(25- 40 years) ...All is well when things are going smoothly...The problem with this guy is...he is highly leveraged

Let us say the current economy plays the villain and jobs are slashed (the likelihood of it looks more probable as days go)...any job loss would have a direct impact on the guy's repayment capacity and inturn NPA figures of banks...Key things to be noted
1) Current salary levels are the highest in the industry...I dont see any significant increase going forward (what with new taxes and a depreciating dollar)
2) While the education industry pumps lakhs of software engineers into the economy the number of jobs in the IT industry are likely to remain same if not decline in the medium term.
3) Approximately 30 percent of ppl in the industry are on the bench (currently)

In short, highly leveraged lifestyle of SW engineers, volatile economic conditions , stagnating industry structure and chances of job slashes are directly pointing at a looming housing loan fiasco.

Of course dual income families can safely wade through this threat...but overall the Sky is falling :)