With hike of interest rates by State Bank of India, the largest Indian
Bank, housing loans are going to become costlier across the Indian
banking sector.

Real estate prices have risen substantially over the last few years
and this has resulted in high demand for home loans. The rise in
disposable income of salaried class is also fuelling the demand.

The tax benefits available on home loan interest and repayment is also
a major factor in driving demand. As per the current regulations,
individuals can claim up to Rs 1 lakh per annum as deduction for home
loan principal repayment and additional deduction of Rs1.5 lakh
towards interest payments.

Therefore the marginal increase in home loan rates may not
significantly impact home loan business growth.

Read more at- http://www.banknetindia.com/