The growth of housing loans has been adversely affected by rising home loan rates. From a 29.1% growth rate in 2005-06, the rate is expected to drop to 17-20% by the end of the current fiscal, as per a study carried out by Assocham.

According to the study, sales in the Indian real estate market have been affected by as much as 60% by the hike in interest rates, and unless corrective measures are not taken, a further slide can be expected, especially in the metros.

The Bank of Baroda has brought down its interest rate on housing loans by 0.5% with effect from September 1, 2007. The rates apply to floating as well as fixed loans availed by individuals, non-resident Indians and persons of Indian origin.

For loans upto Rs.20 lakh, the floating rate option is 10-11%, depending on the tenure, which could be between 5 to 25 years.

Loans above Rs.20 lakh will now be charged between 10.25% and 11.5%, depending on the tenure of 5 to 25 years. Fixed rate loans for 5 to15 years will be charged an interest rate of 11.25% to 12.5% for a loan of upto Rs. 20 lakh.

Loans above Rs.20 lakh will be charged at 11.5% to 12.75%. Meanwhile, HDFC and the State Bank of India have announced that they have no intention of bringing down the home loan rates.

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