The overall market may be sluggish in case of large sized home loans but the affordable housing segment continues to thrive. The boom in the affordable home loan segment is quite visible and loans below Rs.10 lakhs have already increased by a whopping 43% in the last fiscal. The increase in utilization of Urban Housing Fund and Rural Housing Fund is expected to further spur this trend.
Housing loans witnessed overall growth of 23% for FY17 while home loans above Rs.25 lakhs saw a slight de-growth by 1% in the last fiscal as per industry reports. According to the National Housing Bank (regulator for housing finance companies) CEO & Managing Director, Sriram Kalyanaraman, this is a testament to the fact that the money is flowing exactly where the Government desires. The increase in disbursement has been possible since there is higher supply of housing units in the country. This is the result of increased emphasis from the Government. The National Housing Bank has already garnered Rs.9,000 crore as per the urban and rural housing fund from the Reserve Bank of India (RBI) which will be deployed towards growing the affordable housing segment.
The National Housing Bank (NHB) has already built 18.48 lakh homes in rural areas of Rs.29, 000 crore and 1.86 lakh homes in urban areas of Rs.7,700 crore. Small housing finance companies have already entered into the irregular income segment, contributing majorly to the affordable housing category. Public sector banks drove a major part of this growth in the affordable housing loan segment up to Rs.10 lakhs. Disbursements by public sector banks went up by 59% while housing finance companies witnessed growth of 26% in FY17.
The increase is attributed to banks focusing more on affordable housing which is now considered safer than unsecured personal loans or credit cards. Affordable housing finance up to loan ticket sizes of Rs.15 lakhs will definitely be the major category for housing finance companies and public sector banks over the next 5 years and the estimated share increase should be around 37% in FY17.