Kolkata: The hike in key rates by 50 basis points by the Reserve Bank of India (RBI) is likely to bring down the demand for home loans.

According to Chairman and Managing Director of National Housing Bank (NHB) R V Verma, “The demand for home loan was already low due to high interest rates and soaring property rates and the decision by the Apex bank will further dampen the spirit of people seeking a home loan.”

RBI, on Tuesday, increased the repo and reverse repo rates in its monetary policy review due to which even banks have now started raising their respective debts.

Speaking on the sidelines of a function organized by FICCI, Verma, however, expressed some positivity on improvement in property rates. When asked on increase of interest rate of NHB, Verma said, “Right now we are looking into the background of total cost of our funds. After this only we will decide on increasing the rates.”

He said the NHB's projected total disbursement for this fiscal was Rs 12, 500 crore. “For this, we have arranged around Rs 10, 000 crore and rest of the amount will be borrowed from insurance companies. We are already in talks in World Bank for USD 500 million loans,” Verma informed.

He added that mortgage guarantee fund will be set up in the ongoing calendar year.