On the day that the US’ cold turned into full-fledged viral pneumonia, I exhibited symptoms that got us into this mess in the first place. Well, me and one million other people in New Delhi.
The week began with alarming news: Lehman buckled, Merrill sold out, AIG begged.
I glanced over the headlines quickly — and then rushed to get our PAN cards and proof of address photocopied. I ran to the bank to issue me a draft cheque for Rs1.5 lakh. Yes, the Sensex was free-falling, and our investments in the US were about to fall harder. Countless friends straddling oceans and continents feared layoffs. But my husband and I, we had a plan.
To drive ourselves further into debt.
Here in Delhi, the craze among us yuppies over the last few weeks has been the Delhi Development Authority’s housing lottery. At every gathering I have been, it appears a given that entering is something we twenty-something and on up Delhi types must do, like jockeying for golf club membership and wearing sequined saris on Diwali. More than 5,000 flats are up for grabs; by estimates on the closing day, more than one million people out there are praying — really hard.
Yes, some entrants turned to this in the absence of any other real estate being affordable. But many of us are just downright greedy. With their booths and signs, the banks fanned the flames too; hand over Rs5,000 to finance the initial deposit and they assure you of a loan if you are among the lucky few. And then there’s DDA, which will hang on to our checks — totalling at least Rs15,000 crore — only to return most of the money in a few months, without any interest. Whether someone who doesn’t have the Rs1.5 lakh in savings to buy flats that cost up to Rs77.8 lakh should qualify for such a loan is besides the point.
Like I said, that’s how we got into this mess.
In my case, indebtedness began early, when I couldn’t afford graduate school without taking a loan. After a year of working, I wandered into an enormous 1920s one-bedroom with a garden in a section of New York City and was delighted to discover that if I put down $8,200 (a little more than Rs3 lakh at the time) it could be all mine; well, really mostly the bank’s, but who thinks that when you paint walls and redo the kitchen? When I moved, I simply rented the flat out and watched my pile of invisible money double.
When I got married, we needed a bigger house. So we bought another one. When I had a baby, we needed an even bigger house. So we bought, then sold. Easy money. Easy solution.
Of course, we doubled our mortgage and debt in the process. We borrowed against our equity in the home — the infamous never-ending line of credit — to finish the basement into a separate flat. Then this job came up so we rented everything out and moved here.
Within weeks of our arrival, my itch started again.
For the last two years, we have toured flat after flat — at times, many as if on a mission; at other times, as fancy strikes. I scour every real estate website — refreshing searches for “south Delhi” and “3BHK” over and over. We have little savings, are already in debt on our educations, have mortgages on two properties we do not even inhabit, and don’t intend to stay in India forever. But we want a piece of it.
It’s the American way. But judging from the lines outside banks for financing the DDA dream this week, it has also become India’s.
The last time DDA announced such a housing scheme in 2006, it received some 200,000 applications for 3,000 houses. How did that number grow fivefold? Easy money.
According to a report by Reuters, total loans, including mortgages and unsecured loans such as credit cards, grew around 30% annually between 2004 and 2007, an expansion the Reserve Bank terms “unprecedented”.
“Given rising consumer debt, one wonders if Indians are catching up with the West, or catching down,” V. Anantha Nageswaran, investment research head at Bank Julius Baer in Singapore and Mint columnist, told the news agency.
Once upon a time, I planned to own a home for each child I would birth, as a way of paying for their college. “A house is a place to live,” a friend scolded. “Nothing more.”
We have grown comfortable with debt because we want to be comfortable. The lifestyle is an insult to our parents, a generation who thought twice about every purchase and shamed us from seeking luxury.
It will not be an easy bug to shake. In many houses, this week alone served a sour antidote.
Making money is never easy, our parents told us. They were right.
As we vow to live more within our means than wants, to save instead of resorting to property as our excuse for not, my husband and I took another look at the DDA form and chose lower-cost options. But we still submitted. Under a 1% chance for 40% returns.
Some habits are hard to break.
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