A home will always have a deep connection with every individual and buying oneís own home is fondest dream of almost every Indian. The housing industry in India has been growing at a robust 14-15 per cent and is projected to continue to grow for the next few years.
There is an estimated shortage of around 22 million houses by 2014, and the government and apex bodies like the National Housing Bank (NHB) are playing a vital role in trying to fill this gap. The growth in this sector as well as the changing profile and consumption behaviour of the upwardly mobile population have also brought about a sea change in many aspects of the industry, and most notably the profile of todayís home loan buyer.
One of the most evident changes is the decreasing age of the home loan buyer. There has been a trend of reduction in the average age of the home loan buyer from the mid-40s to the mid-30s over the last two decades. There is also a growing segment of under-30 year olds who are buying homes and taking loans for the same.
The rising income levels of this segment coupled with growing aspirations have been major causes of this change in profile. Another major contributor to this phenomenon is the easier access to credit fuelled by banks and housing finance companies (HFCs). Most loan providers view home loans as a high growth product and have been diverting focus to it in the last few years.
Another aspect that has changed is the purpose of a home purchase. While purchasing a house for the purpose of living in it still remains the major reason, there is a growing segment of home buyers who buy a second home for investment purposes.
They also could take a larger home loan for the same as they are aware of the taxation benefits that they can avail of as a result of it. Financially savvy investors are now making use of these multiple benefits of a home loan. As long as there is a significant growth in the housing sector and appreciation of prices, this segment will continue to grow. It is estimated that the Indian mortgage market accounts for 7 per cent of GDP and about two-thirds of the savings of customers availing home loans are deployed in payment of EMIs. Attractive interest rates and ease of credit access here too