The Indian mortgage and housing sector has experienced an impressive growth rates during last 5 o 7 years and a number of factors are responsible for the same. While the builders and developers have found ready buyers even before start of construction, buyers have gained immensely with ever increasing property rates and better returns compared to other sectors of the economy. Housing finance companies are also laughing all the way to their banks with borrowers queuing up to borrow to finance their purchases. The result is that all the players in the field have been benefited by the Indian mortgage growth story. The mortgage rates have risen in recent times from all time low to 6.5% to almost 11.5%, giving some torrid times to those who have borrowed on floating rates of interest. However despite that, the asset bubble which was an apprehension felt never seems to be there at least as of now.

Perhaps this is one sector where favorable policies of the successive governments and continuity of the same is one of the biggest factors responsible for the growth. The tax benefits in terms of deduction of interest and principal from taxable income has been instrumental in giving impetus to average middle class salaried person to go for borrowings and finance the purchase his dream home. Housing developers have also enjoyed tax benefits over a period of time. The decision to allow FDI in the reality sector would give more fillip to the sector and allow the best practices and standards of international players in the field. Another factor responsible for the tremendous growth is the easy availability of cement and other raw material for the construction sector, a phenomenon which was not there say around 15 to 290 years back when cement was a rare and highly regulated commodity. With impetus being given to the infrastructure sector and housing being regarded as a priority sector, the industry has never looked back since then.

The Indian mortgage industry is a saga of great opportunities, tremendous growth and wonderful returns over a period of time. The sector has witnessed a significant double digit growth of almost 30% over last 3 years though the same is expected to be lower at 20% during 2007-08 due to rising interest rates and a slight correction expected in the property market especially in B and C segment markets and centres. According to a study conducted by CRISIL, India, the slower growth reflects the impact of rising property prices and interest rates. The interest rates have touched almost 12% floating and more than 13% fixed, highest since the year 2003 and 2004.

The study also shows that the increase in property rates coupled with higher interest costs have resulted in the negative impact on the affordability index which measures the ratio of rates of property to the net annual income of borrowers or purchasers of the property, the index is still at 5.2, which favors well comparable to other developing nations. The changing profile of the buyers in the Indian property scenario is also changing for a positive. The average age of Indian property buyers and borrowers is reducing. This means a longer repayment period and consequently an ability to borrow a higher amount of home loan. With increasing disposable income, and a trend of double income families gaining ground, the scene was never so good for the sector.

While the home mortgage market is well developed and highly competitive, the option is restricted to buying a home or residence apartment. In case of small business owners and small self employed persons, who operate from their homes, the going is small so long as their business remains small. However as their business grows and expansion demand larger space and separate offices and warehouses, commercial mortgage plans come to the rescue of many of these persons and professionals. Commercial mortgage is a plan or scheme available to business owners for buying a new building, office or warehouse for their businesses and other commercial needs.

Commercial mortgage is very similar to home mortgage in a variety of ways. With a commercial mortgage, you can leverage on your sound business credit report for financing your purchase of a new commercial property.