Av­er­age loan ticket size falls for the first time in many years

Pos­si­bly on ac­count of the Cen­tre’s ini­tia­tives for the af­ford­able hous­ing seg­ment and dip in prop­erty prices

The Hindu Business Line - - BANKING - RADHIKA MERWIN

The Cen­tre’s var­i­ous ini­tia­tives for the af­ford­able hous­ing seg­ment ap­pears to be pay­ing off if the dip in av­er­age ticket loan size of HDFC — the mar­ket leader in the hous­ing fi­nance seg­ment — is any in­di­ca­tion.

Af­ter steadily ris­ing over the past six to seven years, by 5-6 per cent an­nu­ally, the com­pany’s av­er­age loan size has fallen by a notable 10 per cent over the June quar­ter and by around 6 per cent over last year.

The av­er­age loan ticket size for HDFC stood at ₹23.6 lakh in the Septem­ber quar­ter, down from ₹26.3 lakh in the June quar­ter and ₹25.6 lakh in the March quar­ter.

In March 2011, HDFC’s av­er­age loan ticket size stood at ₹18.6 lakh. This has been inch­ing up over the past sev­eral years. The dip in the Septem­ber quar­ter is the first in many years.

What gives?

This could in­di­cate two things. One, there has been a slight correction in prop­erty prices. Two, the Cen­tre’s var­i­ous ini­tia­tives for the af­ford­able hous­ing seg­ment, such as ‘Hous­ing for All by 2022’ and the in­ter­est sub­ven­tion scheme, ap­pear to be tak­ing off. For the mid­dle-in­come cat­e­gory, in par­tic­u­lar, the Cen­tre’s credit-linked in­ter­est sub­sidy scheme has brought good tid­ings. The scheme, ef­fec­tive from Jan­uary 1, 2017, of­fers an up­front in­ter­est sub­sidy of up to ₹2.3-2.35 lakh to el­i­gi­ble bor­row­ers availing them­selves of loans to buy ready-to-use or un­der-con­struc­tion prop­erty.

Lenders have also been go­ing all out to of­fer best deals for the af­ford­able seg­ment (up to ₹30 lakh), which are 25-30 ba­sis points (bps) cheaper than the rates of­fered on loans up to ₹75 lakh.

Loan growth is a func­tion of price and vol­umes. For HDFC, though, the growth in its re­tail loans (23-25 per cent over the last three years) has been mainly led by vol­umes.

Af­ter steadily in­creas­ing over the last cou­ple of years, it needs to be seen whether the sud­den dip in loan size in the Septem­ber quar­ter is a sus­tain­able trend.

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