HDFC sees home loan rates rising by 50bps by mid-2010

However, higher rates will not impact demand if property prices remain stable, says HDFC’s Renu Sud Karnad

Housing Development Finance Corporation (HDFC) expects interest rates on home loans to increase by 40-50 basis points by the middle of next year as inflation inches up, but that will not impact the demand for home loans, its joint managing director Renu Sud Karnad told Moneylife.
 
“The interest rate might harden by 40-50 basis points by the middle of next year, but I don’t think that will change the demand scenario,” she said.
 
However, “What worries me more is that property prices are going up again over the past two months. Developers should understand that affordability is very important in the Indian scenario. They should not let short-term benefits erode the long-term ones,” she said.
 
HDFC has seen robust growth in its home loan portfolio, mainly in Bengaluru, Mumbai and Chennai but also in smaller cities. Ms Karnad expects this trend to continue in the coming quarters. “I think genuine buyers have now come into the market due to the drop in property prices. The demand is here to stay, as the housing shortage is huge, and I am very confident that we are going to see good numbers in the March quarter,” said Karnad. 

– Pallabika Ganguly [email protected]
 

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