A recent press report said that the rising interest rates have had little impact on home loans as borrowings have gone up 21% since March 2010 even as rates have gone up by around 300 basis points in the same period.
Reports said that some of the borrowers have taken loans in from tier-I and tier-II towns where property prices had remained relatively subdued. Some have also begun utilizing their undrawn limits.
According to recent data from the Reserve Bank of India aggregate home loans by commercial banks have gone up from Rs. 3,00,929 crore in March 2010 to Rs 3,64,170 crore as of end August 2011. The data also said that much of the growth in bank credit has been driven by home loans in the current year.
The total bank loans have risen 20.2% year-on-year (YoY) as of August 26, 2011 against 19.3% in the previous year, home loans rose 15.3% in the same period compared to 10.9% in the previous period.
The RBI has raised its key policy rates by 300 basis points (one basis point is 0.01%) in the same period. The rise in policy rates have made all retail loans dearer to the borrowers.