* An estimated
shortage of about 2.2 crore houses by 2014
* The average age of
the home loan buyer from the mid- 40's to the mid-30's over the past 2 decades.
* Growing segment of
under 30 year olds who are buying homes and taking loans for the same.
* Growing segment of
house buyers who buy a second house for investment purposes.
A house will always
have a deep connection with every individual and buying one’s own home is
fondest dream of almost every Indian.
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| Vaithianathan R |
The housing industry
in India has been growing at a robust about 15% and is projected to continue to
grow for the next few years.
There is an estimated
shortage of about 2.2 crore houses by 2014, and the government and apex bodies
such as the National Housing Bank (NHB) are playing a vital role in trying to
fill this gap.
Profile of
Home Loan Buyer...!
The growth in this
sector as well as the changing profile & consumption behaviour of the
upwardly mobile population have also brought about a sea change in many aspects
of the industry, and most notably the profile of today’s housing loan buyer.
One of the most
evident changes is the decreasing age of the housing loan buyer. There has been
a trend of reduction in the average age of the housing loan buyer from the mid-
40's to the mid-30's over the last two decades. There is also a growing segment
of under 30 year olds who are buying homes and taking loans for the same.
The rising income
levels of this segment coupled with growing aspirations have been major causes
of this change in profile.
Another major
contributor to this phenomenon is the easier access to credit fuelled by banks
and housing finance companies (HFCs).
Most loan providers
view housing loans as a high growth product and have been diverting focus to it
in the last few years.
Purpose
of Housing Purchase..!
Another aspect that
has changed is the purpose of a housing purchase. While purchasing a house for
the purpose of living in it still remains the major reason, there is a growing
segment of house buyers who buy a second house for investment purposes.
They also could take
a larger housing loan for the same as they are aware of the income tax benefits
that they can avail of as a result of it.
Financially savvy
investors are now making use of these multiple benefits of a housing loan. As
long as there is a significant growth in the housing sector and appreciation of
prices, this segment will continue to grow.
It is estimated that
the Indian mortgage market accounts for 7% of GDP (Gross Domestic Production)
and about two-thirds of the savings of customers availing housing loans are
deployed in payment of EMIs.
Attractive interest
rates and ease of credit access here too contribute to the growth of this
profile among home loan buyers.
A large chunk of
growth in housing loans is now coming from tier I & II cities, with the
metros approaching a saturation point. The new segment of housing loan buyers
now come from high growth areas such as Pune, Bangalore, Ahmedabad and other
non-metro locations.
As a product segment,
the growth has been seen in ‘affordable housing’, with a loan ticket size in
the range of Rs. 25 lakh to Rs. 40 lakh. Banks and HFCs offer their most
attractive rates for this range, and this has fuelled its growth.
Developers /
promoters have begun shifting their projects to newer non-metro locations or on
the outskirts of large metros. This has helped in de-congestion of many cities
and banks and HFCs also provide a pre-approval for housing loans for most of
these projects.
Today’s housing loan
buyer is an empowered individual. Not only is he spoilt for choice, both in
terms of properties to buy, but also in terms of home loan providers willing to
fund his purchase. He has access to information, is more financially aware and
will have multiple banking or / financial
service relationships.
To cater to this new
profile, banks & HFCs will have to value-add and provide high levels of
personalised and dedicated service, both at the time of sale as well as through
the duration of the loan.
— The author Mr. Vaithianathan Ramachandran, is MD at Tata
Capital Housing Finance
Mr. R. Vaithianathan (R.V)
|
| Vaithianathan R |
Mr. Vaithianathan Ramachandran is the Managing Director (MD), Tata Capital Housing Finance Limited and Head - Consumer Finance & Advisory Business comprising Mortgage Loans, Auto Loans, Personal & Business Loans, Rural Finance and Wealth Management.
He brings above 34 years of industry experience encompassing accounts, finance, regulatory, inventory control and various other areas of expertise. His last assignment was as General Manager-Credit Control & Receivables, Tata Motors Limited. He handled various finance functions including the All India Sales Finance function.
From the year 2000 onwards, he was the Credit Controller for Tata Motors for all its products. He was associated with above than 100 automobile dealerships and abetted reorganization of the dealers’ financials to enable them to turn around their business and reap profits.
From 2007 to 2008, he headed the Operations & Credit function of Tata Motor Finance Limited. There on, he was in charge of the Operations function of Tata Capital Limited and the Credit function of the Consumer Finance and Advisory business.
He started his extensive career in 1978 as an Accountant with Madras Fertilizers Limited where he was in charge of Inventory control, MIS reports and Cash Sales Analysis. Two years later, he was appointed as a Finance Officer at Southern Petrochemical Industries Limited after which, he functioned as an Accounts Officer at Hindustan Teleprinters Limited from 1981 to 1983.
R. Vaithianathan (R.V) is an honours graduate from Madurai University and is a qualified Chartered Accountant and Cost and Works Accountant. He has also completed the “Management Development Programme” from IIM-Ahmedabad.
For media queries, please write to
corporatecommunication@tatacapital.com
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