HDFC, India’s biggest housing finance company, has witnessed a reduction in its average home loan ticket size to Rs.23.6 lakh for the quarter that ended in September this year. This indicates a drop of close to Rs.3 lakh. The previous average home loan size was tabulated at Rs.26.3 lakh in the earlier quarter. This drop indicates possible growth witnessed in the affordable housing loan category although the high value property sector continues to be somewhat stagnant.
HDFC has stated that this sizeable drop in the average size of home loans can be attributed to the Government’s emphasis on affordable housing and also the fact that home prices have not increased lately. HDFC officials have stated that average home loan sizes have always increased over the last few years and the nominal reductions, if any, were only for a few thousand rupees and there has never been a drop exceeding Rs. 1 lakh.
Experts have stated that the drop can be attributed to higher growth in the low-cost homes category. Loan approvals went up by 27% in the individual segment while disbursements also increased by 23% as compared to the same period last year. Affordable housing growth has been sparked by the PMAY (Pradhan Mantri Awas Yojana) which is a subsidy scheme (credit-linked) and there are incentives for real estate developers along with cheaper loans for customers in the affordable housing category. The credit based subsidy scheme was previously modified to cover MIG buyers along with low-income and economically weaker groups. This has widened its overall scope.
Experts also feel that several states are taking their time in terms of approvals after the implementation of RERA (Real Estate Regulation & Development Act) although things are steadily limping back to normal. However, the borrowers do not all belong to the low-income category. As per reports, at HDFC, average customers paid 3.8 times of their annual income towards buying homes. This figure used to be 5.1 times of the annual income around 10 years earlier and 4.1 times of the annual income just one year earlier.