The home loan sector in India is all set to decline. Impact of the rising interest rates is more than visible. Almost ever lender in India is feeling the heat. The growth rate of home loans, which was 29.1% in 2005-06 has fallen to 26.6% in 2006-07.

The situation has worsened because of the absence of suitable corrective measures and the home loan growth rates are all set to decline further and reach a level of 17-20% in current fiscal.

A study carried out by Assocham ‘Impact of Rising Home Loan Rate’ has shown that the real estate market has seen a drop of 60% in sales.

Metros where the drop was noticed include Delhi, Mumbai, Kolkata and Bangalore; its impact could further worsen if interest rates for housing keep rising and are not reversed soon.