Home loan mar­ket 2012: A wa­ter­shed year

The year saw an im­prove­ment in the qual­ity of home loan bor­row­ers

HT Estates - - Front Page - Harsh Roongta

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.

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