According to the reports it has been noticed that the glooming economy and slowdown in real estate has led to the shortfall in demand of the home loans.

A forex consultant stated that the higher interest charged by the banks is the major reason in the downfall of the demand of the home loans. Majority of the banks offer interest rates in the range of 10.50 -11%, which is quite higher. The higher rates prevent the customers from applying for the home loans. Further it has been reported that interest rates charged in India are around 1.5% more than in US.

The slump in demand for home loans is also significant as it came during the quarter which had festivals like Diwali and New Year. However an increase of 60% in disbursement of education loan has been noticed in the last quarter of 2013. Further a increase in the NRI deposits is also noticed. Experts believe attractive fixed deposit rates announced by the Reserve Bank of India for NRIs are a major reason for the record increase.