Deepak Parekh - Interest rates have peaked

HDFC Chairman Deepak Parekh today said interest rates have peaked, and are likely to remain stable in the next six months, while real estate prices could fall by up to 20% in the next few months.

"Interest rates have peaked. In the next six months, they are likely to remain steady. There will be no major correction, neither will they move much upward," Parekh said on the sidelines of HDFC's annual general meeting.

Maintaining that real estate prices were showing signs of cooling down, he said in the next three to four months prices could see a correction in the range of 10-20%.

Parekh said developers are giving freebies such as first six months EMI free to keep the price momentum.

"In many areas prices are coming down as in Delhi, Gurgaon and Bangalore. The freebies being given by the developers are indicative of prices cooling down. There will be correction in real estate prices. However, a crash is unlikely," he said.

Asked whether hardening of interest rates impacted the lender's portfolio, he said HDFC had not see a slow down yet, since approvals grew 30% last fiscal over 2005-06.

"This year, we will be expecting a growth of 25%," he said.