Home loan pie in bank credit widens to 14.4% in June
Demand for home loans from India’s tier-3 and tier-4 districts growing at a faster pace than tier-1 and tier-2 districts post pandemic: Report
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The ASCBs credit growth has been on upswing post FY20, led by growth in retail credit. Moreover, the share of 'housing loans' (contributing to 50 per cent of personal/retail loans) in 'bank credit' has increased to 14.4 per cent in June 2022 from 13.1 per cent in March 2020.
Post Covid-19, work from home has emerged as a dominant trend that is redefining the mortgage loan demand for the household sector.
An internal economic research by SBI says that its study on district wise home loan portfolio (outstanding) for ASCBs (juxtaposing SBI & ASCB results by using market share, trends and benchmarking) shows that total portfolio grew by more than 10 per cent in FY22, with districts in tier-3 and tier-4 areas growing at a much faster rate than tier-1 and tier-2 districts post pandemic.
Subsequently, housing prices have increased significantly (in percentage terms) in tier-3 and tier-4 cities than in major cities over the last year. The combined share of tier-3 and tier-4 districts in fresh disbursement, though small, has also been growing steadily over the years. It has now grown to 36 per cent in FY22 compared to 32 per cent in FY19.
Average ticket size has increased much more in tier-3 (1.3 times) and tier-4 (1.4 times) districts as compared to tier-1 (1.1 times) and 2 (1.0 times) districts between FY22 and FY19.
Furthermore, number of female borrowers in new disbursement increased significantly in FY22 in tier-3 and tier-4 districts. Among the top 20 districts with highest share of female borrowers in fresh home loan disbursal in FY22 (which are mostly rural), six districts are from Chhattisgarh and three from Gujarat and Haryana each.
Amongst the 124 aspirational districts, the performance of some of the districts in fresh home loans is quite impressive. In 76 districts (60 per cent of total aspirational), CAGR (FY22 over FY18) of fresh disbursements was more than 10 per cent.
"This rising home loan demand in rural districts can be attributed to the SVAMITVA scheme providing rural people with the right to document their residential properties which can then help them to use their property for economic purpose. Haryana and Uttar Pradesh, where this scheme has already covered many villages, have more districts where home loan disbursal is increasing at a faster pace," says Soumya Kanti Ghosh, SBI group's chief economic advisor.
Central government schemes like AMRUT, PMAY (U) and Smart Cities Mission have been pivotal in creating a holistic 360 degrees ecosystem that has seen housing demand accelerating in non-metro areas. PMAY(U) in essence has been the pole star of ensuring 'Roof & Respect For All' and has altered the Socio-Cultural fabric meaningfully, by ensuring property ownership to an overwhelming large number of women which can further strengthen other welfare schemes.
Ministry of Urban Housing has recently launched a cluster redevelopment scheme that has the potential to decongest Metro areas suitably as most of the prime areas in cities have dwelling units that were constructed 50-60 years ago and are past their shelf life. A Fast Track, Single Window system for clearance to redevelopment projects through RERA can unclog huge parcels of land and accelerate redevelopment in prime areas. Tweaking the SARFAESI act to enable credit sanction for properties in rural areas can provide further fillip to housing for all in true letter and spirits.
