Affordable home boom adds power to loan surge
Housing loans by commercial banks and housing finance companies (HFCs) witnessed a huge growth during the last five years, with a compounded annual growth rate (CAGR) of 30%. It has also opened up a new segment — low and moderate housing — promising huge opportunity.Updated: Jul 02, 2011 01:30 IST
Housing loans by commercial banks and housing finance companies (HFCs) witnessed a huge growth during the last five years, with a compounded annual growth rate (CAGR) of 30%. It has also opened up a new segment — low and moderate housing — promising huge opportunity.
“We’re giving a lot of thrust on the low and moderate housing segment, which is very large and consumers belonging to this segment are the actual users. Catering to this segment will bring stability to the housing sector,” said RV Verma, chairman and managing director, National Housing Bank (NHB)."We’ve been monitoring the trends and progress of housing in the country, and found affordable housing a very promising segment," he said, while releasing a report on the trend and progress of housing in India.
The NHB is in the process of negotiation with the World Bank for procuring a loan of $500 million for the new segment. “The talks are on an advanced stage for getting $500 million loan for low and moderate housing projects and we’re quite positive about it,” Verma said.
If suppliers and builders bring down prices, demand in housing sector would go up, Verma said. “This will improve market sentiments and the capacity to extend credit will also go up.”
According to the report, home loans disbursed by public sector banks (PSBs) in 2009-10 to be Rs 70,640 crore, housing loan outstanding of commercial banks stands at Rs 3.16 lakh crore and housing finance companies at Rs 1.53 lakh crore.
Following the government’s policy of affordable housing for all, builders and lending institutions have been found to be reworking on their business model. “Going forward, affordable housing will emerge as options in the market to suit average Indian families,” the report said.