Banks reported robust growth in their home loan portfolios in the third quarter of the current fiscal year, showcasing an expansion of over 15%.
Despite consistent increases in interest rates on home loans over the past two years, with the weighted average lending rate crossing 9% and reaching 9.12%, home loan demand has not waned.
Major banks recorded significant growth in their home loan portfolios during the third quarter. ICICI Bank and Bank of Baroda reported a year-on-year rise of nearly 16%, while Punjab National Bank and Kotak Mahindra Bank experienced almost 15% growth in their home loan books. State Bank of India, the country’s largest lender, witnessed a commendable 13.2% growth in its home loan book during the third quarter.
HDFC Bank
HDFC Bank which has folded in HDFC reported a healthy double-digit YoY growth for two quarters, ending December 31, 2023. The growth in sales turnover has come on the back of a wider distribution network The Bank’s market share has grown approximately by 18% to 20% on incremental disbursals, post the merger. It has exhibited robust and consistent higher double-digit, year-on-year growth across its Home Loan Business for the first six months, post the merger. On a sequential basis, the Bank has gained a leading position as it recorded a growth of 3.6% in the third quarter which was the highest amongst its peers in home loans.
“The bank’s fundamental strategy has been to improve the turnaround time of processing at the front end. Post-merger turnaround time has reduced to almost one-third. This coupled with the erstwhile HDFC Ltd’s strength of connecting with customers in person is a potential game changer in terms of both sales turnover and cross-sell,” the bank said.
Added to this strategy is a renewed focus on the self-employed segment which will further increase opportunity size, it said, adding that post-merger, the Bank has already launched and expanded its product basket through banking surrogates as well as GST programmes for better assessment of such profiles.
Housing boom
Traditionally, the third quarter sees heightened demand for retail loans, particularly home loans, as families prefer to make property purchases before and during festivals. Builders leverage this period to launch new residential projects, capitalizing on the festive spirit and attracting homebuyers eager to invest in new houses.
Despite the impact of high interest rates, the demand for home loans has remained robust. The fundamental need for housing in the country has outweighed the impact of elevated interest rates, according to industry experts.
Banks attribute this resilience to the fundamental importance of homeownership, even in the face of monetary policy adjustments by the Reserve Bank of India, which has raised the policy rate by 250 basis points since May 20.
