Bankers are not too worried about the recent slowdown in affordable housing loans and are confident that the segment will regain its mojo soon.
“I feel that this (lull in affordable housing loans) is just an aberration due to the rate increases, which have made home loan rates inch upwards. I do not think that this trend will sustain. The sentiment from the ground remains extremely positive. As an industry, we are positive that next year, we will see better growth in affordable housing loans,” said Rahul Mehrotra, managing director and CEO, Religare Housing Development Finance Corporation.
His response comes on the back of an SBI
Simultaneously, the share of fresh housing loans with an average ticket size of more than `50 lakh has witnessed a rise in 2022-23 (April-March) so far, the report said.
“This (data) indicates that there is an emerging asymmetry in the home loan market. This also shows that the demand for housing loans by people at the lower end of the strata, who take loans for the affordable housing sector, has been hit,” the report said.
The fall in the proportion of home loans with a lower ticket size can be attributed to the linking of home loans with the external benchmark-linked lending rate (EBLR) or repo rate.
In order to ensure immediate transmission of interest rates, home loans of lower ticket size are offered interest rates linked to EBLR. Currently, outstanding home loans stand at `18.9 trillion. Around 48% of home loans are linked to EBLR.
In its February monetary policy, the RBI
Considering the sharp rise in the repo rate, banks have increased their loan tenure or equated monthly installments (EMIs) depending on the age of the borrower, tenure of the loan and the residual tenure of the loan.
Around 4.7 million accounts and loans worth `8.2 trillion have witnessed a rise in loan tenure and EMI in their existing home loans, the report said.
“The rate increase has been a definite dampener, but everybody understands that it is temporary in nature. In the last 50-odd years, the RBI has increased rates and decreased rates on the basis of macro-economic factors. Also, financiers have tended to adjust their loan tenures accordingly while passing on the rate hike,” Mehrotra said.
Typically, any home loan with a ticket size of `5 lakh-35 lakh can be categorised as affordable housing. But broadly, affordable housing is more about customer profile, which is informal in nature. These profiles do not have documented income proofs and well-defined cash flows, say bankers.
“The up to `30-lakh ticket size segment is wide. There may be some impact on demand for apartments. But as of now, we are not seeing any decline in demand in the affordable housing segment,” Manoj Viswanathan, managing director and CEO, Home First Finance, said.