With interest rates charged by banks on loans declining, bankers anticipate a revival in their home loan portfolios. They feel that as the rate cut are been implemented by most banks, home loans taken in the economy may rise in the upcoming quarters.

As most public sector banks including State Bank of India, Punjab National Bank, Canara Bank have reduced their benchmark prime lending rates (BPLR), home loans are expected to get cheaper in the coming times. Bankers feel that home buyers should take advantage of this low interest regime that is likely to prevail in the economy.

Syndicate Bank's General Manager, B.R. Pai said, "We expect our home loan off take to increase by 22 percent y-o-y next quarter with the fall in interest rates." The bank faced a fall in its growth of home loans during the last quarter. In the last quarter growth of home loans disbursed by Syndicate Bank were only 18% against a 30% growth for the same quarter, a year ago.

There is an unexpressed demand for residential property that is going to increase the demand once liquidity crunch in the segment is resolved, said Kumar Gera, Chairman of the Confederation of Real Estate Developers' Associations of India (Credai).

C Abraham, General Manager of Union Bank feels that as the property prices are falling in the recent times, more genuine buyers will come to take home loans and therefore the home loan disbursals will rise.

"Even Union Bank has been given a mandate by the board to make property purchases for housing our staff and for long term investment purposes. Valuations are down considerably from ridiculously high levels," he said. The bank has cut its home loan rates by 50 basis points to 10.75%.

The recent measures by RBI to infuse liquidity into the system have helped to view a positive reaction in the market. Vijaya Bank's CMD, Albert Tauro said, "Demand waned for our home loans in the last few months. This is the right booster that we were looking for our home loan segment." During the last quarter home loan portfolio of Rs 4,000 crore grew by only 7%.

A.C. Mahajan, CMD, Canara Bank beleives that home loan portfolio of banks which have been falling will see a revival due to the rising demand that is likely to come in from risk-averse people.

However, an SBI official said that home loans disbursal in SBI may not see a huge increase. "Loan applications of people from sectors like IT which are seeing layoffs are being more carefully scrutinized to avoid defaults," the official said.

The largest lender, SBI will still move cautiously under the tough economic conditions that are ongoing in the system, added the official.