Home Loan Growth Slowing Down - Nishit Vadhavkar

The retail home loan market growth has slowed down to around 25 pc from 40 pc as per ICICI Bank.

Lenders are unwilling to lend to borrowers. This is a far cry from the heady days of 2002-2006 when the lenders would line up in front of the borrowers.

Banks normally lend upto 85 pc of a property's value. The fear of Bank's now is delinquency by the borrowers. If the asset value falls below 85 pc, the borrower may decide to give up his home rather than pay up the loan. This is true especially in the case of a second home.

The disposable incomes earned by today's generation of IT and BPO employees has been funneled into the real estate market. This is purely as an investment option. At some point, putting in fresh money may seem unviable leading to delinquencies.

The scenario seen in 2001 is repeating where a bank FD is giving more than 10 pc safe assured return.2007 is going to be a stockpickers market. The US is facing problem over subprime lending.Subprime lending is lending to borrowers with a risky credit record. Banks do this in boom times to earn higher interest margins.

Defaults here will lead to a rise in NPAs. The early warnings signs of maybe a recession in the US are there. Once global liquidity tightens, India is not an isolated market which will go up whereas the other markets do the collapso.

Best is to sit on cash and watch the world cup.Amongst large caps, reliance looks to be a safe bet at around rs 1200 levels.BHEL, CONCOR and L and T will add solidity to one's portfolio but if bought at much lower levels. Just my 2 bits.