The effective rate of interest for the individual housing loans will work out to below 9 per cent and the limit will be applicable for loan amounts ranging up to Rs 8 lakh.

Similarly, the borrowers in the middle income group and highest income bracket with an average income of Rs 20,000 will also be covered under the new concession announced by the government.

When contacted, the chairman and the managing director of the National Housing Bank (NHB), P P Vora said, the raise in the exemption limit will increase disbursals susbstantially from the housing finance institutions as 92 per cent of the customers of these institutions will stand to gain from this concession.

``With demand for housing going up, the concession will give an impetus to the construction activities and the industrial climate will improve remarkably'' Vora said.

Asked on whether it will have an impact on the non-performing assets of the financial institutions, Vora said, "the recovery rate of the individual home loans is almost 97 per cent and the net NPA is less than 2 per cent which is quite managable''.

Morover, it is not only seen as an effort to make housing more affordable but will certainly give a big push to the economy.

``It is another good news for owners of the self-occupied properties, the need for the raise in the exemption was being felt since the cap on the priority sector lending was revised from Rs 5 lakh to Rs 10 lakh, chairman of the HDFC V Suresh said.

``The market has turned a buyers' market and unless customers' interests are taken care of, it will be difficult for the HFC's to survive, the new concession announced by the government was a welcome step '' Suresh added.