‘78% home loans for cheap housing’
The affordable housing sector drove the individual housing loan market in 2017-18, with 78% loans disbursed for the purchase of houses costing less than ₹25 lakh, according to the latest data from the National Housing Bank (NHB), the regulator of all housing finance companies (HFCs).
Overall, the individual home loans market grew at 21% (to ₹13.1 lakh crore) in 2017-18 as compared to 14% the previous year, indicating a turnaround in the sector, according to the data which was collected by NHB from public sector banks (PSBs) and HFCs. PSBs and HFCs account for 95% of the housing loan market. NHB data does not include loans given by private banks.
“In 2017-18, 78 % of the new accounts booked were for loans under the ₹25 lakh category, clearly showing that the Pradhan Mantri Awas Yojana (PMAY) impetus is working. That is where most of the subsidies are going,” said NHB managing director and chief executive officer Sriram Kalyanraman.
The numbers point to a revival in the housing sector, something that real estate developers have admitted is happening in the so-called affordable housing sector. To be sure, in cities such as Mumbai, Delhi, Bengaluru, and Chennai, even apartments with price tags of under ₹50 lakh are classified as affordable.
Housing sales have a cascading effect on the economy, in terms of sales of steel and cement, and the creation of jobs, especially for semi-skilled or unskilled workers.
Under PMAY, launched by Prime Minister Narendra Modi in 2015 to provide housing for all by 2022, the Centre provides an interest subsidy on housing loans to those belonging to the Economically Weaker Section/Low Income Group (with annual income of ₹6 lakh) and Middle Income Group (with annual income between ₹6 lakh and ₹12 lakh and between ₹12 lakh and₹18 lakh). According to Vaijinath MG, chief general manager, State Bank of India (SBI), and head of the real estate and housing business unit at India’s largest lender, the average ticket size of loans with all major players like SBI is around ₹23 lakh to ₹24 lakh. “Any additional support from the government in the form of affordable housing schemes, etc., will give a push and help beneficiaries make up their mind to buy a house.”
Gross Non Performing Assets (NPAs) for individual housing loans also declined marginally in 2017-18. Of the total outstanding housing loans of ₹13.1 lakh crore, NPAs stood at 1.05% in 2017-18 as against 1.09% in 2016-17. Of this, the highest level ( 9.46%) was in housing loans up to ₹2 lakh (in 2016-17 this was 10.43%).
Delinquency in loans up to ₹5 lakh also declined from 4.38% in 2016-17 to 4.13% in 2017-18.
“Traditionally, below ₹5 lakh delinquencies are higher because they are the segment that gets affected very easily by various issues. The value at risk below ₹5 lakh comprises ₹2,144 crore, which, in light of the overall housing loan market is not much,” Kalyanraman said. Total disbursement of housing loans by PSBs and HFCs in 2017-18 also grew 33 % (₹4.3 lakh crore) against ₹3.2 lakh crore in 2016-17.