Rate hikes no bar to home loan demand

CHENNAI: Notwithstanding rising interest rates, mortgage lenders continue to remain optimistic of strong loan growth in the festive season ahead. Banker and analysts said lower real estate prices , coupled with special interest rate schemes and higher salary payouts, are working in favour of strong home loan growth.
"We are expecting a 22-25 % growth for this year," said Renu Sud Karnad, managing director of HDFC.Bank of Baroda is also expecting a similar growth rate for its home loan, its chairman and managing director M D Mallya added. Last year, during the same period, BoB’s home loan portfolio had grown by around 21%. A host of banks, including State Bank of India, Punjab National Bank and Corporation Bank, among others, are offering home loans at special rates till December 31.
SBI has extended its special loan scheme wherein loans are disbursed at 8% for the first year and 9% for the second and third year. "The second half of the year is going to be the major booster in terms of home loan growth," said Mohan Tanksale, executive director of PNB. His bank is targeting to disburse Rs 2,000 crore in the second half of FY11. The bank had sanctioned Rs 1,000 crore of home loans in the year-ago period.
"Real estate prices have stabilized. The income of people have also become more stable in the last few months," said R R Nair, director and CEO of LIC Housing Finance.
Sundaram Home Finance, the home loan finance arm of Sundaram BNP Paribas, is also upbeat. It has distributed Rs 540 crore in home loans in the first two quarters and is confident of recording similar growth in the festive season . "While the Rs 20-lakh plus segment is seeing an uptick , the big driver for us, in tier II towns, are sub-Rs 20-lakh loans," said Srinivas Acharya, MD, Sundram BNP Paribas Home Finance.