JOIN USRealty loans to continue growth streak
As the real estate sector made a comeback in 2021 with an overhang of inventory in the top 7 cities, banks in India have benefitted in terms of increase in the home loans portfolio.
Some of the major banks have witnessed a double digit growth in retail segment.
With 25 per cent of its portfolio in the home loan and loan against property segment, leading private sector lender Kotak Mahindra Bank had recently revealed in its investor call that it had reached the best ever quarter for home loans.
At Rs 68,871 crore in the quarter ended December 2021, the home loan portfolio of the bank grew 38 per cent year-on-year (YoY) and 12 per cent sequentially.
Ambuj Chandna, President - Consumer Assets of the Mumbai-based bank feels that trend in the housing loan business is bullish and should continue. Chandna told DH that reverse migration to tier I cities like Bangalore would be key in the growth of the business.
“With the pandemic becoming endemic, reverse migration of talent has started happening – and this is likely to further fuel the housing demand in the tier 1 cities”, Chandna told DH, adding that better affordability, higher urbanization and the move towards nuclear families would provide them with opportunities. “Our growth has been very secular across tier I and tier II cities. We are well positioned with one of the lowest interest rate offerings on housing finance and would continue to focus on growth in the mortgage business.”
State-owned Canara Bank also says that this portfolio will continue to grow at the same pace. Canara Bank’s home loan segment grew 14.82 per cent YoY in the quarter ended December 2021.
The bank’s executive director Manimekhalai in a recent interaction with DH said that, the bank would like to not just position itself as a retail home loans distributor but also strengthen themselves through loans to real estate projects, a segment that has witnessed de-growth of 5.88 per cent in the third quarter of FY22.
“We have approved a lot of projects. That means legal formalities are all done. This would help us correct this de-growth. Once we give loans to real estate projects, we will have the first right of refusal for a housing loans product which will help us grow”, Manimekhalai told DH.
Bengaluru-headquartered Ujjivan Small Finance Bank also says that in the next two to three years, home loans would be an important portfolio for the bank with a focus on affordable projects in tier I cities.
Meanwhile, Anarock’s Chairman Anuj Puri told DH in an e-mail statement, “We may see the inventory overhang come down to 2019-levels if the sales momentum continues. Going forward, we anticipate housing demand to see decent growth in 2022, proviso the pandemic remains under check and doesn’t impact economic activity. Demand will remain steady and be driven primarily by end-users and even few investors.”
As per ANAROCK Research, despite the cataclysmic second Covid-19 wave in H1 2021, approximately 2.78 lakh units were completed across the top 7 cities in 2021, against 2.14 lakh units in 2020.
Their data also indicates that 3.85 lakh units are scheduled to be completed across the top 7 cities in 2022.
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