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NHB sees further dip in home loan growth, blames higher prices

NHB sees further dip in home loan growth, blames higher prices
PTI
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First Published: Sun, Sep 18 2011. 05 35 PM IST
Updated: Sun, Sep 18 2011. 05 35 PM IST
Mumbai: Housing finance watchdog National Housing Bank (NHB) has said demand for home loans will slowdown in the next few months owing to high property prices.
“Housing loans can be a bit sluggish because buyers feel there is no way of getting properties at a reasonable price, they are postponing their purchases,” NHB chairman and managing director R V Verma told reporters here over the weekend.
Since April, home loan growth has been 16-17%, which is one percentage point lower than last fiscal. He further said for the full fiscal he sees credit off-take lowering at over 15%.
Verma, however, maintained that it is the booming property prices, rather than the repeated rate hikes by its parent Reserve Bank, that is affecting the demand.
“I think the main reason for the current sluggishness is the high property prices. If the property prices come down, there could be an increase in demand even if the interest rates go up a little,” he said.
The RBI has increased its key short term rates a record 12 times over the last 18 months with an eye to tame the uncomfortably high inflation that stood at 9.78% for August.
Home loan buyers, especially those who are on the floating rates, are one of the worst affected by the higher interest cycle as the cost of servicing the loan goes up.
Verma said the NHB has asked housing finance companies to monitor loans, especially those under floating rates, closely to look for any signs of stress building up.
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First Published: Sun, Sep 18 2011. 05 35 PM IST
More Topics: NHB | Home Loan | Finance | Interest Rates | Housing |