Barring parts of Delhi and Mumbai, realty prices have corrected by 15-30 per cent, spurring home loan demand and raising the hopes of bankers. “Our business has picked up significantly. I will just say that May was better than April, June was better than May and the July number so far has been very very positive. We are targeting growth of 20-25 per cent in terms of home loan disbursal in fiscal 2009-10,” said HDFC chairman Deepak Parekh on the sidelines of a function organised by industry chamber Federation of Indian Chambers of Commerce and Industry (Ficci).

However, he cautioned the real estate players against any increase in housing prices, which could reverse the recent buoyancy in the market. “The real estate market has just begun correcting itself and it would be extremely unfortunate if developers were to increase home prices at this juncture,” Parekh said. Some of the top rung realty players, he hinted, have already started increasing prices in mid-income projects. “With liquidity no longer a constraint, certain developers are seeking to once again increase their margins,” he added.

On the issue of home loan rates, Parekh said the company has been reviewing them and if the cost of funds comes down for the company, the benefits will certainly be extended to retail customers. However, he ruled out the possibility of the rates going northwards for the next three-four months. “There is sufficient liquidity so far in the market. I don’t think it is going to harden that much at least in the next three to four months,” he said when asked if the large government borrowing programme will have an adverse impact on the interest rates.

“The government’s borrowing programme is over a longer period of time and the finance minister did say he will work with the RBI and find a way to minimise the borrowing,” he said. The government plans to borrow nearly Rs 4,00,000 crore from the markets during 2009-10, up by almost 50 per cent from 2008-09, for funding the widening fiscal deficit necessitated after three stimulus packages for the economy.