Indian billionaire Adi Godrej said real estate will deliver his company’s fastest growth over the next five years as foreign rivals such as Unilever Plc and Procter & Gamble Co. constrain his flagship consumer-goods unit.

“The strongest growth potential we see is in our property-development business,” Mr. Godrej, chairman of the Godrej Group, said in an interview at his office campus on the outskirts of Mumbai. “No one has any significant market share. It is divided among a large number of players.”

Godrej Consumer Products Ltd., in which Temasek Holdings Pte. bought a 5% stake in January, has faced “tremendous competition” in recent years from international companies eager to tap India’s booming consumer market, said Mr. Godrej, 70. That trend is set to continue, he said.

Unilever, the world’s second-biggest maker of consumer goods, has almost a third of the beauty and personal-care market in India after more than a century operating in the country. In real estate, where investment rules constrain some global operators, Mr. Godrej said he mainly contends with smaller, domestic rivals. India’s property market is forecast to grow to US$180-billion by the end of this decade from $66.8-billion in 2011, according to the India Brand Equity Foundation.

Mr. Godrej’s optimism isn’t shared by some investors and analysts. Godrej Properties Ltd. has slumped 18% in the past year, the worst performance among the group’s three publicly traded units. Fifteen of the 22 analysts that cover Godrej Properties have a sell recommendation on the stock, according to data compiled by Bloomberg.

“If you compare the consumer business of Godrej with the property business, yes, property will grow faster, but overall we’re not very positive on Godrej Properties,” said Anubhav Gupta, an analyst at Kim Eng Securities Pvt. in Mumbai, who recommends selling the shares.

The BSE India Realty Index tumbled 28% in the last year as India’s central bank raised interest rates a record 13% from March 2010 to rein in inflation. That cooled economic growth to 6.9% in the 12 months to March 31, the slowest pace in three years, and damped demand for homes and offices. The bank cut its benchmark repurchase rate to 8% from 8.5% on April 17, the first reduction in three years.

The one thing Canadians won’t be retiring anytime soon is their mortgage debt, according to a new survey.

Bank of Montreal says 51% of Canadian homeowners plan to carry their mortgage into their retirement years.

“It’s a phenomenal number I think,” said Tino Di Vito, head of the BMO Retirement Institute.

But Phil Soper, chief executive of Royal LePage Real Estate Services, said times have changed and he believes Canadians can handle the burden.

“People are more sophisticated in their approach to personal finance today than the previous generation,” says Mr. Soper. “People are living longer, working longer and making real estate plans longer or further into their lives.”

Another trend, one which was not considered by the industry before, is people moving into more expensive, upscale homes after retirement. “Traditionally people paid off their mortgage and people lived in their home until it was time to downsize,” he says. “It’s not necessarily a dangerous trend.”

Another part of the trend could very well be strategic. With rates on a five-year closed mortgage at about 3.5%, paying down that debt might not seem as high a priority for many homeowners. That logic might not be so sound, says Doug Porter, deputy chief economist at Bank of Montreal.

“The extremely low level of interest rates is acting both as an inducement for people to take on more debt than they would have in the past and on the flipside not encouraging them to save as in the past.”

People could end up working longer and it might also mean there will be that much less equity in the home you’ll be leaving to heirs.

The attitude of homeowners could also reflect the longer amortizations the mortgage industry saw before the government cracked down on the rules, Mr. Porter said.

Traditionally, mortgages were amortized over 25 years, but that number ballooned to 40 before Ottawa twice lowered the limit, which now stands at 30. Many are calling for it to be reduced back to 25 years.

Ms. Di Vito says the issue is how it’s affecting retirement with half of Canadian homeowners saying their debt load was hindering their ability to plan and save.

“Carrying debt into retirement is a threat to financial security,” says Ms. Di Vito, who believes Canadians need about 70% of their pre-retirement income to maintain the same lifestyle. “That assumes other expenses such as mortgages are already taken care of.”

She says half of Canadian homeowners age 50 to 59 still have mortgage debt based on Statistics Canada information. By 60 to 69, 25% of those people still have a mortgage.

It doesn’t help that real estate prices continue at all-time highs. The Canadian Real Estate Association said this week the average home price reached $372,608 in April. In Vancouver, even though prices dropped almost 10% year over year, the average sale price in April was $735,315. Almost 60% of B.C. homeowners expect to take mortgage debt into retirement.

Author Talbot Stevens wonders how people will survive in their retirement.

“People get a hold of a line of credit and they spend $40,000 on upgrading their home. At least with that, you have something to show for it, maybe 40¢ on the dollar,” says Mr. Stevens, who worries about more frivolous spending. “We really have to be more responsible with debt and what we are using it for.”

NEW YORK – When Jennifer Anderson’s family could no longer afford their mortgage and lost their home, she expected many years to pass before they would again become property owners.

But less than two years later, in March, they purchased a US$297,000 house outside Phoenix, Arizona, after qualifying for a loan backed by the U.S. government.

They joined a small but growing number of Americans who are making a surprisingly quick return to homeownership after defaulting on their loans or being forced into short sales that cost their banks money.

“We didn’t really expect it,” said Anderson, 40. “We were resigned to the fact that we were going to be in a rental property for a while.”

Financial problems arose after she lost her job as a customer service representative for a health insurance company and her husband’s hours at an automaker were cut. To make matters worse, they used up her retirement savings trying to keep their home.

Data is not available, but interviews with more than 30 lenders, builders, Realtors and consumers suggest that a growing number of Americans are getting back into the housing market, even though they went through a foreclosure, bankruptcy or short sale in recent years.

“Most are not ashamed or bashful about what happened because so many people were forced into that reality in the last six years,” says Graham Epperson, vice president of sales in Arizona for the PulteGroup, a leading U.S. homebuilder.

They want to escape rising rents and take advantage of home prices, which are down by about a third from an April 2006 peak.

FHA TO THE RESCUE

Much of the comeback wouldn’t be possible without help from the U.S. government, namely the Federal Housing Agency. It was created in the 1930s as part of a broader push by Washington to foster home ownership and fight the Great Depression.

The number of FHA-insured home loans has soared in recent years as subprime loans have disappeared and fewer Americans have qualified for conventional mortgages backed by Fannie Mae and Freddie Mac, which were rescued in 2008 by the U.S. government after loan losses.

Federal Reserve Chairman Ben Bernanke stressed the point last week, saying banks have become so restrictive that many worthy homebuyers are being frozen out of the market, and lending practices are not likely to loosen any time soon.

In contrast, FHA-backed loans are an option for many who defaulted on their mortgages or were forced into a short sale. FHA loans, combined with those backed by the Department of Veteran Affairs or the Department of Agriculture, had a record share of the market in 2011.

“These are not mainstream programs geared for mainstream borrowers,” says Greg McBride, senior financial analyst at Bankrate.com, who expects to see more of those with blemished credit reenter the housing market.

Most of these reentering buyers are using FHA-insured loans, which at the end of 2011 accounted for about 30% of loans for home purchases, compared with 4.5% in 2005.

A conventional mortgage typically carries a lower interest rate than does an FHA-backed loan, but it also requires a credit score of at least 720, proof of income and a significant down payment. In contrast, FHA loans historically have been available to help low and moderate-income families buy homes.

FHA borrowers typically need a credit score of at least 620 and a 3.5% down payment. The FHA charges an upfront mortgage insurance premium of 1.75 of the loan (which can be rolled into the mortgage) and an annual 1.25% premium on the outstanding loan.

BAD MEMORIES

For some economists, alarm bells are ringing.

Edward Pinto, resident fellow at American Enterprise Institute, a conservative think tank, said the rise of FHA-backed loans flies in the face of the government’s stated mission of getting more private capital into housing finance.

Furthermore, a requirement that borrowers taking FHA-backed loans make a down payment of just 3.5% of the purchase price brings back bad memories of how many subprime mortgages turned bad as housing prices began to fall in 2006.

According to the S&P/Case-Shiller 20-city composite index, U.S. home prices were down 3.5% in February from a year earlier and are now at their lowest since late 2002, although there have been some signs that prices are beginning to inch up.

“FHA is putting people back into situations that still have high risk of default,” Pinto said.

He noted that a lot of these loans are made to consumers with credit scores well below 720 — the median national score for all households— and that about 15% of loans made to people with scores of 620 to 659 are likely to fail.

A SECOND CHANCE

There have been about 4.2 million foreclosures in the United States since 2007, according to data firm RealtyTrac. It expects that number to climb to 6 million by early 2014.

A bankruptcy remains on a consumer’s record for seven years, but that consumer can start raising his or her credit score in several months by decreasing debt, not borrowing more and paying bills on time.

Anthony Bolante/Reuters

Debra and Robert Eaton qualified for a Veterans Administration loan to purchase a US$252,000 home near Tacoma, Washington. They moved into the three-bedroom house the day before Thanksgiving.

“Most of the loans that are getting done are for people who have really rebuilt their credit,” says Frank Donnelly, president of the Mortgage Bankers Association of Metropolitan Washington, D.C. “They have to prove (to the lender that) it was something like a job loss that caused this and not chronic delinquency.”

As well as a minimum credit score of 620, lenders look at why the person lost the home. They’re much more likely to lend to people who lost a job than to consumers who could have afforded their mortgage but chose to default.

Builders eager to sell homes are not only offering to help once debt-mired clients find loans but providing free credit-counseling programs like the Homebuyer Solutions program offered by Quadrant Homes in Bellevue, Washington.

“A lot of times when people enroll they just don’t know where to start,” says Teage Christensen, manager of the program. His goal: help clients get at least a 600 credit score.

Debra Eaton stumbled on the program when she and her husband were visiting model homes out of curiosity. They had filed for bankruptcy in 2008 after her husband was seriously injured at work and she took time off from her job to care for him.

After the bankruptcy, their credit score plunged to 460. “It’s not that you don’t pay your bills because you want to go on vacation,” she says. “You don’t pay because you don’t have the money.”

By November 2011, their credit score had improved to 680 and Eaton and her husband, a veteran, qualified for a Veterans Administration loan to purchase a US$252,000 home near Tacoma, Washington. They moved into the three-bedroom house the day before Thanksgiving.

“If you would have asked me then if I was going to buy another home, I would’ve told you no way,” she says.

© Thomson Reuters 2012