key reasons..
1. Real estate price
correction,
2. Rental hikes and
3. Income tax sops
Home-buyers seem to
be coming back in strong numbers, going by the increase in the housing loan
portfolio of public sector banks.
The first quarter
(2014-15) numbers reveal that there has been a significant increase in the
number of housing loans extended compared to the year-ago period.
Demand growth
State Bank of India
(SBI) has recorded 15.6% growth, with other banks reflecting a similar trend.
The growth is significant in loans up to Rs. 30 lakh. Data available with SBI
show that this category accounted for 75% of the total housing loans.
Similarly, many other
banks, including SBI (15 per cent), Punjab National Bank (20 per cent),
Allahabad Bank (26 per cent), Andhra Bank (22.8 per cent), and Corporation Bank
(8 per cent) registered growth.
Good traction in
demand is seen in Mumbai, Bangalore, Chennai and parts of Eastern India.
In this scenario, the
housing loan portfolio occupies a significant chunk of the total retail lending
of many banks.
For example, it
accounts for nearly 60% and 39% of the total retail credit deployment of Union
Bank of India & Corporation Bank, respectively.
From a banker’s
perspective, retail loans, in general, and housing loans, in particular, are
seen as ‘safer credit’ with relatively lower non-performing assets that are in
the range of 2 to 2.5%, compared with other loans.
There has been muted
growth in the housing segment in recent years but now people are coming forward
to buy affordable houses.
Price correction in
the real estate sector, increasing rentals & tax sops could be driving this
spurt in interest.
The growth in home
loans has now scaled up from single-digit to double-digits. For example, growth
in the housing business was 41% in the June quarter, on a year-on-year basis,
compared with 5% in the previous year.
Retail Home Loan
Growth*
Name of the Bank %
SBI 15.6%
PNB 20%
Allahabad Bank 26%
Andhra Bank 22.8%
Corporation Bank 8%
* First quarter (2014-15)
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