Surge in Housing loan – increase in defaulters

Surge in Housing loan – increase in defaulters

There is surge in housing loans but raise fears of defaults.  According to analysis of data released by the Reserve Bank of India (RBI), banks’ home loan exposure grew by Rs 1.42 lakh crore, second only to the jump in lending to Non-Banking Financial Companies (NBFCs).

Housing loans disbursed by Indian banks surged by 15.6% in the past 12 months to Rs 10.5 lakh crore, but one-third of this amount given to economically weak borrowers is giving bankers sleepless nights.

According to real estate firms, the uptick in loan growth to the sector is driven by the affordable housing segment.
According to data provided by real estate advisory Anarock, the number of homes sold in the affordable housing segment has seen a jump of 32.5% over the same period last year. Affordable housing accounted for about 40% of all supply in seven major cities from January to October this year.

According to RBI’s research, housing loans up to Rs 2 lakh had the highest level of non-performing assets (NPAs) or bad loans, essentially loans on which defaults are likely, in 2016-17. The apex bank said in a report earlier this year that NPAs in the sub-Rs 2 lakh ticket size were the highest at 10.4% for the period under consideration.

Some are of the opinion that the impact was due to  demonetization and GST.  The low cost housing is popular with dabbawalla, vegetable vendors and the middle class whose basic income is cash.

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