property slump

Mumbai: It seems the rising interest rates and high property prices are all set to spoil the party in the real estate sector.

For the first time in nearly five years, bankers are complaining of a drop in the volume of home loan applications.

Sources told CNN-IBN that enquiries and applications for home loans have seen a decline of 10 to 15 per cent in the past two months.

Bankers says the 2 per cent rise in interest rates on home loans in the past one year and the exponential growth in property prices seem to have led to a fall in home buying.

Market leader ICICI bank says it is witnessing a 10-15 per cent fall in the volume of home loan applications. Sources at rival SBI also say that it may be difficult to achieve the second quarter home loan targets.

"We are seeing this trend in only the last month or so. But we believe that in terms of actual sales, which are happening for developers in the market, they are down by at least 10 to 20 per cent," Rajiv Sabarwal, Head of Retail Assets with ICICI Bank, said.

Bankers say there is a demand for home loans from smaller centres where property prices have still not shot up unlike the metros. However, they are skeptical about future growth in home loans.

Sources in SBI say they have met disbursement targets for home loans in the first quarter, but meeting targets in the second quarter will be tough. It seems the days of 40 per cent compounded annual growth for home loans is finally over.
courtesy:-CNN IBN