Improved buyer sentiment has resulted in home loan outstanding of India’s banks doubling in the past five years, RBI (Reserve Bank of India) data show. According to the numbers available with the India’s banking regulator, outstanding home loans stood Rs 16.85 lakh crore at August-end 2022. Outstanding home loans of Indian banks increased to Rs 16.85 crore at the end of 2021-22 as against Rs 8.60 crore at the end of fiscal 2016-17, data show.
Numbers available with the RBI also show outstanding home loan registered double-digit growth in the first five months (April-August) of financial year 2022-23 ─ even as the apex bank increased the repo rate three time during this period. A 4th hike in the repo rate, at which the RBI lends funds to scheduled banks in India, was announced on September 30, 2022, brining it at 5.90%.
Housing loan outstanding increased in the range of 13.7% to 16.4% year-on-year in each of the first 5 month of FY23.
Sector experts are of the view that the interest rate hike by the RBI, which has severely diminished home loan affordability in the past few months, seems to have little impact on demand for housing finance.
According to banking experts, housing purchases require long-term planning and home loans are typically not the single-biggest drivers of those decisions.
“Usually, two to three interest rate cycles play out during the loan timeframe of 12 to 15 years. So, borrowers understand that interest rates may also come down during such a long tenure of loan,” HDFC Managing Director Renu Sud Karnad told media.
“I don’t think interest rate hike will have a material impact on demand for home loans,” Sud added in her comment.
This is reflected in the residential sales numbers as well. Data available with PropTiger.com show home sales continued to show robust growth, registering 49% YoY growth between July-September 2022 as compared to the corresponding period last year.
An alumna of the Indian Institute of Mass Communication, Dhenkanal, Sunita Mishra brings over 16 years of expertise to the fields of legal matters, financial insights, and property market trends. Recognised for her ability to elucidate complex topics, her articles serve as a go-to resource for home buyers navigating intricate subjects. Through her extensive career, she has been associated with esteemed organisations like the Financial Express, Hindustan Times, Network18, All India Radio, and Business Standard.
In addition to her professional accomplishments, Sunita holds an MA degree in Sanskrit, with a specialisation in Indian Philosophy, from Delhi University. Outside of her work schedule, she likes to unwind by practising Yoga, and pursues her passion for travel.
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