Housing Loans sourcing witnessed robust development 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, major credit bureaus in India has released the CRIF CreditScape: Housing Loans. The report offers insights on the home loans space and notable trends across geographies and yearly information.
Some of the essential trends that emerge from this study contain, the housing loans industry has grown at a 3-Year CAGR of 6.5 per cent. The Housing loan sector witnessed a 10.4 per cent development in portfolio outstanding (PoS) in Dec’19 more than 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, development in Dec’20 more than Dec’19 was 9.6 per cent. Experts say that the recovery was largely due to a massive 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 development in disbursements. Industry authorities think that Q4 FY 2020-21 is also anticipated to finish on a positive note with disbursements displaying tremendous development. Active housing loan borrowers base as of Dec 2020 stands greater than pre-pandemic levels in Dec 2019, Y-o-Y development of almost 5 per cent.
Affordable Housing Segment
As of December 2020 reasonably priced Housing Segment constitutes 60 per cent of the industry by worth and almost 90 per cent by volume. Affordable Housing Segment (ticket size up to Rs 35 lakhs) constitutes 90 per cent of the industry by volume and almost 60 per cent by worth as of December 2020.
The report stated, inside the reasonably priced segment, volume development in loans of Rs 15 lakhs – Rs 35 lakhs more than the last 4-5 years, coupled with an growing share in general originations across rural, semi-urban and urban segments indicate shifting preferences of purchasers towards greater ticket sizes.
Steep recovery has been seen in Q2 and Q3 FY 2020-21, with about 80 per cent of the demand (volume) coming in from the reasonably priced segment. It also stated that rural housing demand for mid-variety and greater ticket sizes also continued to improve more than the last 5 years.
Young borrowers and millennials
According to the report, young borrowers and millennials (age group beneath 36 years), with higher aspirations and commensurate disposable incomes are increasingly getting seen as an eye-catching 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 provided to millennials and young borrowers also continued to improve more than the last 5 years, with a CAGR of 6.2 per cent.
The report additional states that the public sector Banks have retained the biggest industry share in housing loans. Over the last 3 years, public sector banks have been the biggest players in terms of worth and volume with a close to 45 per cent share, dominating reasonably priced and mid-variety segments. On the other hand, private banks have a somewhat smaller sized share of 17 per cent by worth. As of December 2020, the prime 5 private banks constitute 15 per cent of the HL sector book by worth.
Geographically, Mumbai, Delhi NCR, Bangalore have been the prime 3 housing loan markets. Mumbai and Delhi displayed higher delinquencies as of December 2020.
Tier II and III geographies had a greater annual development price in HL book compared to metros with a huge portion of the development coming in from the reasonably priced and mid-industry segment. As of Dec 2020, inside Tier-II cities, the prime 10 cities by portfolio size constituted 37 per cent of the Tier II industry, Surat being the biggest industry in Tier II.
Vishakhapatnam and Coimbatore amongst the prime 10 cities, had the biggest Y-o-Y development of more than 10 per cent. Vishakhapatnam reported enhancing quantity delinquencies (90+ DPD) by 11bps more than the preceding year even though Coimbatore saw a jump of only 13 bps. Lucknow and Coimbatore state reporting the highest typical ticket size of HL at Rs 18.03 lakh and Rs 17.17 lakh respectively.