Home loan market 2012: A watershed year
The year saw an improvement in the quality of home loan borrowers
The year 2012 was in many ways a watershed year as far as the home loan market is concerned. What affected the residential sector the most was the slowing demand due to rise in property prices and high interest rates.
When one looks back at 2012, one finds that concerted efforts were made by public sector banks to add to the already formidable muscle power of the State Bank of India. SBI has clearly become the price warrior in the home loan market with rates as low as 10%. Other PSU banks have also made an aggressive pitch for home loan consumers which is good for the overall development of the market.
The other big development of 2012 is the improvement in the quality of the home loan borrowers. Today, 63% of the total customers to whom home loans were disbursed have been given CIBIL scores of 800-plus which is up from 23% in 2010 (Source: CIBIL).
With the spread of customer awareness on credit rating and its impact on their ability to get loans in the future, they have realised that maintaining a good track record is absolutely essential. This has led to the improvement in the overall quality of the home loan book and in turn attracted more lenders. The trend is only going to continue in 2013.
The other big thing has been that given the increase in the risk weightage, banks have been circumspect about lending to developers, or even providing home loans to consumers, for projects under construction. This is clearly putting pressure on the developers as availability of finance whether through the home loan consumers or directly from the lenders has been reduced significantly. This is expected to weed out weaker developers. The trend is likely to intensify in 2013.