Bangalore-based public sector lender, Canara Bank, is aiming to double its home loan portfolio to around Rs 17,500 crore by December 2010. The bank’s home loan portfolio stands at Rs 8,464 crore, little over 5 per cent of the total advances, as of December 2009, the bank’s executive director K L Jagadish Pai said.

“We had actually set a target to achieve at least 10 per cent of our loan portfolio from housing loans by March-end 2010. But, it is not possible in the remaining two months and we intend to disburse another Rs 6,000 crore during the first three quarters of the next financial year-ending December 2010,” he told Business Standard after announcing the bank’s third quarter financial results. For year-ending March 2010, the bank has set a target of Rs 1,75,000 crore advances.

He said the bank has performed better in home loan sector and achieved 27 per cent growth in the first three quarters of the present fiscal-ended December 2009 compared to the same period last year. The bank, in August 2009, had launched a scheme with 8 per cent interest rate for the first year and 9 per cent for the second year and 10 per cent for the remaining period of the loan for individual home loan customers. The campaign has been extended up to March 2010.

“The real estate sector is reviving and people are coming back for loans. We are the bank with lowest exposure to real estate among our peers. Our exposure to commercial real estate is less than Rs 2,600 crore presently compared to Rs 2,900 crore at the beginning of the fiscal. We are looking at financing more and more Bangalore-based real estate companies so that we will get more individual accounts during this year,” Pai said.

The bank is looking to increase housing loans, as there is a long gestational period. The sanctions may touch 10 per cent of the asset book of the bank, but in terms of disbursals it could be lesser, he said. In the next two months of the present fiscal, the bank aims to lend another Rs 500 crore, he said.

He said the bank has increased the number of retail hubs to 37 across Tier-I, Tier-II and Tier-III cities in the country. “We are targeting 10 accounts per day for each retail hub,” he said. The bank will focus more on the individual home loan seekers than the commercial real estate sector. The ticket size of these loans will be Rs 15-20 lakh.

The bank was not aggressive in the commercial real estate segment despite big demand for funds, he said adding that presently the total exposure stands around Rs 2,000 crore. “We are not bullish on commercial real estate like many other banks,” he said.

The total sanctions of the bank presently stand at close to Rs 30,000 crore, he said adding that part of it will be disbursed over next 18 months.

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July was a great month for the real estate market in the U.S.
According to the National Association of Realtors, home sales nationally posted an unexpectedly large increase of 7.2% during the month of July, the largest monthly jump in over a decade. What could cause such a sudden boost in home buyer confidence? Attractively priced abundant inventory, and government subsidized monies.
After nearly a year of financial meltdowns in and around the real estate sector, inventory has been high due to large scale foreclosures and short sales, forcing housing prices in some areas to hit levels not seen since the 90’s. This has resulted in tens of thousands of entry level U.S. homes coming on the market at price points perfect for the first time home buyer; whom the U.S. government is currently quite keen to help with the recently passed first time home buyer tax credit program.
This fantastic program enables qualified home buyers the ability to recoup 10% of the purchase price of a new (for them) home, or $8,000, whichever is less , via a government funded credit. This is a fantastic opportunity for anyone looking to buy a home, and one for which is almost impossible for first time home buyers to pass up. Couple this with the aforementioned low priced properties (be they foreclosures, short sales, or just adjusted market value) and you have the recipe for July’s gigantic increase in home sales. This increase made July the strongest month for U.S. real estate sales since August of 2007, with a seasonally adjusted annual rate of 5.24 million sales! And not only was July the strongest month for said real estate sales, but also the fourth consecutive month for which home sales increased in the U.S. (June’s increase totaled an equally impressive 4.89 million sales!)
Coupled with the equally successful Cash for Clunkers program, it looks as though the first time home buyers tax credit has helped to jump start the United States economy to a point where, with just a bit more work and continued consumer confidence, the U.S. may finally be ready to exit the global recession; joining the economies of Japan, Germany, Hong Kong, and France among others whom are beginning to post full scale economic growth for the first time in many, many months.

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