One in every three home loan borrowers have seen their loan tenures extend beyond 20 years or a 25 per cent rise in equated monthly instalments (EMIs) over the last one year.

With the default rate on housing loans already as high as 3.5 per cent, banks are offering to extend loan repayment tenures even up to 25 years for customers uncomfortable with the substantial increase in EMIs.

The country's largest home loan provider, ICICI Bank, has seen repayment periods for about 25 per cent of its mortgage borrowers shooting past 20 years on the back of rising home loan rates.

Since January 2006, home loan rates have gone up by up to 400 basis points. Most of the customers affected are those who borrowed in the last 2-3 years.

Analysts said the increase in borrowers' salaries over the last one year has failed to keep pace with the rise in EMIs.

Asked about the number of mortgage accounts where the repayment period has been extended beyond 20 years, Sunil Rohokale, head, mortgages & real estate at ICICI Bank, said, "We expect it to be in the range of 20-25 per cent of the total number of customers with reference to the latest change in interest rates."

Public sector banks, which had been allowing repayment up to 20 years, are also encouraging borrowers to reschedule their loan tenures.

"As the market heats up, there is some risk element attached to it. There may be defaults here and there. Banks will have to take a calculated risk in rescheduling repayment," said the chairman and managing director of a public sector bank.

According to U S Bhargava, chief general manager, Punjab National Bank, "Wherever there has been a good increase in salaries, people have opted for higher EMIs. We also have the provision to allow repayment up to 25 years. With interest rates increasing in the last one year, borrowers who opted for 15-20 year loans are prolonging their repayment periods without increasing EMIs."

The average maturity on home loans is 10-15 years. Banks have the discretion to extend the repayment tenure by 5-10 years, said bankers.

However, for most banks repayments have to be completed before the borrower's retirement or 65 years of age.

In such cases, borrowers are expected to service higher EMIs through retirement benefits. The default rate on the housing loan portfolio stands at 3.5 per cent for several banks, as against 1-1.5 per cent two years ago.

Home loans have grown by around 33 per cent in the last two years and the total outstanding at the end of December 2006 was around Rs 2,10,000 crore.