The housing loans market has grown at a 3-Year CAGR of 6.5 per cent. The Housing loan industry witnessed a 10.4 per cent growth in portfolio outstanding (PoS) in Dec'19 over Dec'18.
Housing Loans sourcing witnessed strong growth in Q3 and Q4 of 2020. Almost 50 per cent of all loans sourced in the year was in the last 3 months of 2020.
CRIF High Mark, leading credit bureaus in India has released the CRIF CreditScape: Housing Loans. The report provides insights on the home loans space and notable trends across geographies and yearly data.
Some of the key trends that emerge from this study include, the housing loans market has grown at a 3-Year CAGR of 6.5 per cent. The Housing loan industry witnessed a 10.4 per cent growth in portfolio outstanding (PoS) in Dec’19 over Dec’18.
Vipul Jain, Head of Products, CRIF High Mark says, “Housing Loans sourcing witnessed strong growth – Pent-up demand, lower interest rates, favourable government incentives and discounts from developers, helped in the sector’s growth. Home Loan lenders continue to be bullish about this sector. Affordable Housing (loans up to Rs 35 lakhs) contributed to 82 per cent of sourcing volumes with growth driven by Tier II and Tier III cities.”
Housing Loans Market
Despite the Covid19 pandemic, growth in Dec’20 over Dec’19 was 9.6 per cent. Experts say that the recovery was largely due to a huge rebound in originations in Q3 FY 2020-21.
As compared to 6 per cent in Q3 FY 2019-20 (pre-Covid 19 level) Q3 FY 2020-21 witnessed 28 per cent Q-o-Q growth in disbursements. Industry experts believe that Q4 FY 2020-21 is also expected to end on a positive note with disbursements showing tremendous growth. Active housing loan borrowers base as of Dec 2020 stands higher than pre-pandemic levels in Dec 2019, Y-o-Y growth of nearly 5 per cent.
Affordable Housing Segment
As of December 2020 affordable Housing Segment constitutes 60 per cent of the market by value and nearly 90 per cent by volume. Affordable Housing Segment (ticket size up to Rs 35 lakhs) constitutes 90 per cent of the market by volume and nearly 60 per cent by value as of December 2020.
The report stated, within the affordable segment, volume growth in loans of Rs 15 lakhs – Rs 35 lakhs over the last 4-5 years, coupled with an increasing share in overall originations across rural, semi-urban and urban segments indicate shifting preferences of buyers towards higher ticket sizes.
Steep recovery has been seen in Q2 and Q3 FY 2020-21, with around 80 per cent of the demand (volume) coming in from the affordable segment. It also stated that rural housing demand for mid-range and higher ticket sizes also continued to increase over the last 5 years.
Young borrowers and millennials
According to the report, young borrowers and millennials (age group below 36 years), with high aspirations and commensurate disposable incomes are increasingly being seen as an attractive audience for housing loans, with a share of 27 per cent in the annual originations in FY 20-21 (till Dec 2020).
Average ticket size of home loans given to millennials and young borrowers also continued to increase over the last 5 years, with a CAGR of 6.2 per cent.
The report further states that the public sector Banks have retained the largest market share in housing loans. Over the last 3 years, public sector banks have been the largest players in terms of value and volume with a near 45 per cent share, dominating affordable and mid-range segments. On the other hand, private banks have a relatively smaller share of 17 per cent by value. As of December 2020, the top 5 private banks constitute 15 per cent of the HL industry book by value.
Geographically, Mumbai, Delhi NCR, Bangalore were the top 3 housing loan markets. Mumbai and Delhi displayed high delinquencies as of December 2020.
Tier II and III geographies had a higher annual growth rate in HL book compared to metros with a large part of the growth coming in from the affordable and mid-market segment. As of Dec 2020, within Tier-II cities, the top 10 cities by portfolio size constituted 37 per cent of the Tier II market, Surat being the largest market in Tier II.
Vishakhapatnam and Coimbatore among the top 10 cities, had the largest Y-o-Y growth of over 10 per cent. Vishakhapatnam reported improving amount delinquencies (90+ DPD) by 11bps over the previous year while Coimbatore saw a jump of only 13 bps. Lucknow and Coimbatore state reporting the highest average ticket size of HL at Rs 18.03 lakh and Rs 17.17 lakh respectively.