Demand for home loans has picked up after the lockdown and easing of restrictions whereas the average ticket size of personal loan dropped, according to a recent report by BankBazaar.
The first quarter of 2021 started on a promising note, with the average ticket size for home loans soaring to Rs 28.43 lakh from Rs 27.74 lakh in the previous quarter. This plummeted with the second wave, in Q2, but since the third quarter onwards, the ticket sizes have been picking up again.
The fourth edition of BankBazaar Moneymood 2022 highlights credit purchase trends in India in 2021 and presents the outlook for 2022.
As per the report, close to 70% of BankBazaar’s customer base have a credit score of over 700 points, with 36% having a score of 800 points or more.
According to the report, women are more conscious of their financial habits compared to men, reflective in their credit scores. Over 72% women chalked up a score of 700 or more, compared with 66% men. Even in the high scores category, 40% women reported scores of 800+ compared to 35.6% men. Overall, salaried people had better scores compared to self-employed. Here, 69.2% salaried people had a score of 700+ compared to 61.25 self-employed people. Only 27.5% of self-employed people had scores above 800 compared to 40% salaried.
Commenting in the same, Adhil Shetty, CEO, BankBazaar.com, said, “In the last few of years, there is greater transparency on how interest rates on credit products are set, and the role of credit score in the entire process. Consequently, people understand the need for a good credit score, and are actively tracking them. Women, especially, have been doing a better job of maintaining a good credit score, and thereby improving their chances of accessing credit. Nevertheless, there are gaps that need to be filled.”
“While 67% people who check their credit score on BankBazaar had a score of 700+, only 36% of them had a score of 800+ – a score that would enable you to get the best rate on any credit product from most financial institutions. It is for this reason that our first co-branded credit card has regular credit fitness reports as one of its USPs,” he added.
Home Loan Demand Rebounds
2021 was the year of the turnaround after the pandemic for home loans. Despite reversals from the second wave of the pandemic, the year has been a time of growth. The first quarter of 2021 started on a promising note, with the average ticket size for home loans soaring to Rs.28.43L from Rs.27.74L in the previous quarter, as per the BankBazaar data. This plummeted with the second wave, in Q2, but since the third quarter onwards, the ticket sizes have been picking up again.
Personal Loans Getting Smaller
The average ticket size for personal loans dropped for the fourth consecutive year from Rs 1.92 lakh to Rs 1.86 lakh. The average ticket size for women at Rs1.87 lakh was marginally higher than that of men at Rs 1.86 lakh. The non-metro average loan ticket size fell sharply to Rs 1.73 lakh this year from Rs 2.19 lakh last year. Metros, on the other hand, climbed up to an average loan ticket size of Rs 1.91 lakh from last year’s average of Rs 1.87 lakh, overtaking the non-metros. The softening of average ticket sizes for loans tracks industry trends following tightening of unsecured credit policies as well as the rise of small and ultra-small ticket loans such as ‘Buy Now Pay Later’ loans.
“The constraints of the pandemic increased the importance of credit cards as the first line of credit as well as the easiest payment mode. Coupled with easy accessibility due to contactless application processes via Digital KYC, the demand for credit cards bounced back strongly and continues to rise. In the coming year, we expect to see similar acceleration in the loan segments as new originations return to the pre-COVID levels riding on Digital KYC,” said Pankaj Bansal, Chief Business Officer for BankBazaar.com.
Fuel Cards Up With A Vengeance
Credit cards gained popularity by leaps and bounds. Two very interesting trends emerged. This first was the almost 10x jump in the demand for fuel cards. Sky-rocketing fuel prices are driving consumers to look for any option to discount their fuel prices, and rewards and benefits on fuel cards allow them to do this well.
The share of fuel cards has gone up to 13.1% of the overall cards, up from 4.95% last year. With fuel prices still showing no signs of coming down and offices and schools opening up slowly, the demand for fuel cards is expected to remain high in the near future.
As shopping from home took centre stage, rewards cards have bounced back strongly to grow more than 100% from last year. With customized rewards, cashbacks and offers on online and offline shopping for essentials, luxury, lifestyle spends and entertainment, shopping cards are looking more attractive than ever, and the demand seems set to rise in the coming year as well.
The second very interesting trend in credit cards has been the number of women opting for credit cards. The percentage of women credit card customers grew almost 50%, from 8.41% last year to 12% this year. While the number of women opting for credit cards has increased across the board, the change is most noticeable among women below 25 years. The below 25 years age group has been the most aggressive in adopting credit cards, and grew strongly at 175% compared to all other cohorts, which grew at roughly 100%.