According to the latest report by the State Level Bankers’ Committee (SLBC) – Gujarat, there has been a notable decline in the number of takers of housing finance. In the first quarter of FY 2025, only 1.01 lakh individuals opted for housing loans, a drop from 1.5 lakh borrowers recorded during the same period in FY 2024.
Interestingly, though the number of housing loan applicants saw a decline, the total amount disbursed increased by 62% year-on-year during the said period. The report highlights that disbursal surged from Rs 8,307 crore in Q1 FY 2024 to Rs 13,433 crore in Q1 FY 2025. This suggests a clear trend towards higher ticket sizes in housing finance, indicating that while fewer people are taking out loans, those who do, are opting for larger sums.
Bankers attribute this trend to a growing demand for luxury and premium housing, as opposed to the relatively muted demand in the affordable segment. “The heightened interest rate appears to have a dearer effect on the lower and middle-income segments. These groups typically drive the affordable housing sector. On the other hand, the premium and luxury segments seem less affected by the liquidity squeeze. Buyers in these categories typically have more financial resilience and are less dependent on external financing, allowing them to continue purchasing high-value properties,” said a senior official of SLBC – Gujarat, requesting anonymity.
As a result, the overall value of disbursed loans has increased despite a decrease in the number of borrowers. Other reasons cited for the rise in disbursals by bankers is the increase in jantri rates. “The jantri rates were raised in April 2023 and the hike was later deferred to July 2023. During the April to June quarter therefore, the disbursals were higher but the ticket size was relatively lower. This year, the revised rates are applicable, leading to an increase in costs and therefore, disbursals.”
Dipak Patel, president of Credai Gujarat, said, “The demand has been somewhat low in the past few months. Housing prices too have been stagnant. There has been good demand for bigger houses since Covid-19. Their supply has increased and their sales too have risen. This is a reason behind the increase in disbursal amount. We expect the demand to normalize in the upcoming festival season.”
Meanwhile, last financial year's merger of HDFC and HDFC Bank, also led to a substantial rise in the housing finance portfolio in Q1 of FY 2024, sources told. The high base effect could also be a strong reason for the decline in the number of takers.
