For the home loan market, volume seems to be the name of the game at present, with emphasis on expanding book rather than focussing on margins. The combination of lower property prices, attractive interest rates and aggressive promotions does seem to be working, and banks are seeing a progressive pickup in disbursals.
Axis Bank has entered with its own discounted rate scheme for new home loans, PNB and SBI have extended the time period for which their low rate scheme will be applicable.
Banks have been conservative with their lending. The target base remains the salaried customer with a regular source of income. Monthly installments are capped at 50–55% of net monthly salary. Demand for housing remains high, and the majority of borrowers are owner-users rather than pure investors. Hence, they prefer to pay the monthly instalments even in times of financial stress.
We do not see banks being in a hurry to raise home loan rates until they see definite signs of overall interest rates in the system hardening.