The financial information services provider and credit rating company IRCA has said that it expects the home loan industry in India to grow by 17 to 19 percent in the current fiscal year. The agency predicts growth in the said segment inspite of a slowdown in the economy and decrease in affordability of housing finance.

The reasons for the growth are many, such as the expected lowering of home loan interest rates, affordable schemes provided by banks and increase in the sizes of loan amounts (because of increase in the prices of property). According to the agency, these factors could support the 17 to 19 percent growth in the home loans industry in the financial year 2012-13.

Meanwhile, there are also many challenges facing the sector such as increase in the property prices, decrease in the affordability of home loans due to increase in property prices at a faster rate than hike in incomes and general slowdown in the economy. These factors could affect the growth in the home loan segment adversely.

It should be noted that home loans penetration in the country has reached 7 percent, from 4.5 percent in 2004. But, it has not increased from 7 percent in the last 5 years.