The Reserve Bank of India (RBI) data suggests home loan outstanding of banks has doubled in the last five years. Contrary to the general perception that interest rates have a tangible impact on home buyers who buy their homes through borrowed funds, the RBI data shows the home loan outstanding of banks almost doubled to Rs 16.85 lakh crore in the last five years.
As per the RBI release, in the first five months of the current fiscal, home loan outstanding of banks has registered double-digit growth. This is despite the fact that the RBI raised the key interest rate thrice during this period by record 140 basis points (bps), which led to a hike in the home loan rate.
The housing loan outstanding of the banks was at Rs 8,60,086 crore at the end of fiscal 2016-17, and the same has increased to Rs 16,84,424 crore at the end of 2021-22.
The total sales in the top eight cities was at 1,45,651 units in the January-September period of 2021.The January-September figure of this calendar year is higher than the 2,61,358 units sold during the entire 2019.
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The RBI data demolishes the interlinking of interest rates and home loan borrowing as it shows that that banks’ housing loan outstanding increased in the range of 13.7 to 16.4 per cent year-on-year in each of the first five month of the current financial year.
The outstanding at end-August 2022, has risen to Rs 17.85 lakh crore. Most of the developers maintain that the demand this festive season has been quite encouraging and post the festivals it might be a new record.
It is noteworthy that from March 2016, the home loan interest rate was on a declining trend from an average of 9.45 per cent to 6.95 per cent till April 2022.
This was due to the RBI policy on repo rate which was on a downward trajectory from 6.25 per cent in March 2017 to 4 per cent in March 2022. But now the RBI has raised the repo rate by 190 basis points in the current fiscal.
(The writer is CEO, Track2Realty)
