India’s largest mortgage financier, HDFC Ltd, has approved retail home loans to the tune of Rs 2 trillion in FY22 so far, signifying the huge demand for home loans in an otherwise subdued credit market. This is the highest ever home loan approval by the mortgage financier in a financial year.
Interest rates for housing loans are, perhaps, at the lowest levels they have ever been and are one of the key reasons why there is a huge demand for housing loans in the market with all lenders, including public sector banks, private sector banks, and housing finance companies competing to offer the cheapest rates to gain market share. The low interest rate is a consequence of the liquidity injected into the system by the central bank to tide over the coronavirus (Covid-19) pandemic.
The demand for housing loans is being driven by first time homeowners as well as by those who are looking to move up the property ladder. Geographically, the demand for housing loans is coming both from metros and non-metros. And, if one were to look at the segments, demand is being driven by affordable housing as well as high-end markets. The sweet spot for housing is still in the price range of Rs 50 lakh to Rs 1 crore, the lender said in a statement.
“In over four and half decades, I have not seen a better time for the housing sector than now due to lower interest rates, stable property prices, government’s thrust on affordable housing, improved affordability, favourable demographics, increasing urbanisation, and rising aspirations,” said Renu Sud Karnad, MD, HDFC Ltd.
“The government’s thrust on housing is a recognition that a rapidly growing country like India with a large young population needs more houses at affordable price points which would enable more households to become homeowners,” she said.
The lender said, affordable housing will continue to be the driving force behind the real estate sector in India. “The demand for affordable homes in India is extremely deep and resilient. With more developers transitioning to the mid and affordable segment by providing right sized, right priced units which are affordable for end users, the affordable residential real estate segment will continue to see strong traction,” HDFC Ltd said.
To increase its footprint in the affordable housing segment and also in smart and green housing, the lender has signed memoranda of understanding (MoU) with various entities, whereby it is raising funds, which will be directly deployed in these segments.
The central government has come out with schemes such as credit linked subsidy scheme (CLSS) under the Pradhan Mantri Awas Yojana (PMAY) that have helped in moving towards the goal of housing for all. Karnad is of the opinion that the residential real estate segment will continue to see strong traction going forward as the demand for housing is not just pent-up demand but it is a structural one.
Around 270,000 home loan customers of HDFC Ltd have availed off the benefits of the CLSS scheme of the government. The lender has disbursed loans to the tune of Rs 45,914 crore under the CLSS scheme as of December end, wherein the subsidy amount stood at Rs 6,264 crore. Further, for the nine months ended December 31, 2021, 30 per cent of home loans approved in volume terms and 13 per cent in value terms have been to customers from the economically weaker section (EWS) and low-income groups (LIG).
