The National Housing Bank today said there has been a slowdown in the growth of housing loan uptake due to higher interest rates and rising property prices.
Traditionally, growth in housing finance loans was witnessed at 25% each year for four consecutive years before the slowdown began, NHB Chairman and Managing Director RV Verma told reporters on the sidelines of the 26th Skoch Summit here.
"In FY11, the demand grew by about 16% to Rs 62,000 crore which points out the slowdown," he said.
Even in FY10 when the recovery process began, the growth was about 19%, he said, explaining that rising interest rates coupled with the jump in property prices have dented loan demand.
During the four years prior to the 2008 crisis, housing loan portfolio for housing finance companies grew 25%. In FY10, it grew 19% and in FY11 it grew 16-17%, Verma said.
Warning that he is already getting reports of inventory pile-up, Verma said demand would go down further if rates continue to be hiked.
RBI raised key interest rates in May this year by 50 basis points to battle high inflation, its ninth rate hike since March, 2010.
The NHB, which acts as a regulator for housing finance companies and provides such companies with a re-finance window, said it is not thinking of hiking its lending rates at present.
NHB has raised its prime lending rates to 10.5% from 10.25% three months back and has no plans to further hike rates, he said.
The company has disbursed nearly Rs 12,000 crore as of now, Verma said.
When aked if NHB plans to sell its stake in Mahindra Rural Housing Finance, Verma said there is no such plan presently and the company will stick to the investment.
The National Housing Bank has a 12.5% stake in Mahindra group company, Mahindra Rural Housing Finance Ltd (Mahindra Home Finance).
Mahindra Rural Housing Finance is a wholly-owned subsidiary of Mahindra & Mahindra Financial Services Ltd.