In conjunction with its soaring real estate industry, India is a gigantic market for home loans. Just look at the figures and you will have no doubt over it. According to the reports of Assocham, India would need as many as 45 million residential units to fulfill the housing requirements of its population, in the next 5-years. Here we can say that the ever-rising population of India is increasingly converting itself into a potential asset rather than an unbearable liability. However, the point that comes up here is about the purchasing power of this growing population. If industry reports are to be believed the average per capita income in India can multiply by four by year 2020. But this is for sure that purchasing residential property in India will become more and more capital-intensive with time and perhaps that's why home loans in India will be one of the hot selling products for the finance industry in India. The size of the home loan market in India can be expected of the fact that the middle class of the country will grow by more than 10 times from its current size of 50 million to 583 million in the next 18 years. Not just from within the country, exponential levels of demand have been expected from the NRI Home Loans segment. The Non Resident Indians are likely to gradually raise their investments in the Indian property markets as the industry consolidates and systematizes its operations. Thus, the Indian Housing Finance Corporations (HFCs) and banks are slated for a sustainable boom, much more than the one experienced in the past 5-years. As far as the present scenario is concerned, rise in home loan interest rates from 7 per cent of the early 2000s to 12-14 per cent in the recent times has severely impacted the demand. Prior to 2005-06, a staggering year on year growth of 49.5, 73.9 and 48.6 per cent had been witnessed by the Indian banks in the disbursal of home loans, which later fell down to 29.1 and 26.6 in the preceding years.
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