Home Loan for Affordable Housing in Tier-I Cities

Affordable Housing Mar 11, 2022

The property market, especially affordable housing, is driven by factors such as availability of jobs, growth in incomes, and access to credit. Home loan rates are at an all-time low with rates hovering around 7% and the net interest rate taking inflation into consideration is around 2% [1]. Low rates along with the decline of the third wave are resulting in a broad-based revival of the housing sector. At TEAL, we analyzed the loans given by  banks and Non-Banking Financial Companies (NBFCs) for affordable housing during 2017 - 2021 in the following Tier I cities - Mumbai City, Pune, Bengaluru (includes Bengaluru city and suburbs), Hyderabad. We used the definition of housing units priced under Rs. 45 Lacs as "affordable" for the purpose of this analysis. A detailed analysis of the affordable housing market in Tier-I and Satellite cities is available in TEAL’s Affordable Housing Report (2017 - 2021) [2].

TEAL is India’s largest repository of real estate data.  At TEAL, we leverage cutting-edge big data analytics and machine learning to power our range of due diligence products and valuation tools. Our data repository covers title documents, municipal and litigation records, RERA registration details among other data points in Delhi-NCR, the Mumbai Metropolitan Region, Pune, Bengaluru, Hyderabad, Warangal, Chennai, Coimbatore and other cities in Maharashtra.

Credit Linked Subsidy Scheme (CLSS)

The Credit Linked Subsidy Scheme (CLSS) is an initiative under the Pradhan Mantri Awas Yojana (PMAY) scheme that has contributed to availing home loans for affordable housing more accessible. The CLSS is a home loan scheme which envisions “Housing For All'' by 2022. This scheme offers affordable homes to people belonging to the Economically Weaker Section (EWS), Low-Income Group (LIG), Middle-Income Group-I (MIG-I), and MiddleIncome Group-II (MIG-II) of society. Customers availing this scheme are eligible to avail interest subsidy on the purchase/construction /enhancement of dwelling unit [3].

Loan Disbursements for Affordable Housing

Source: TEAL Data

A look into loans given by banks and NBFCs for affordable housing during 2017 - 2021 in Tier I cities - Mumbai City, Pune, Bengaluru (includes Bengaluru city and suburbs), Hyderabad - shows the yearly change in the share of affordable housing. The loans include all retail loans given for home loans and Loan Against Property (LAP) by banks and NBFCs.

Despite 2021 recording the highest yearly total loan amount disbursed during 2017 - 2021 in Bengaluru, the share of home loans for affordable housing remained the lowest in the 5- year study period at 6%. On the contrary, Pune recorded the highest share of home loans for affordable housing in total disbursed in the year 2021 at 41% - 4% and 8% higher than 2020 and 2018 levels respectively.

Mumbai, comparatively, registered an overall lower share of loan amount disbursed for affordable housing during the study period. In 2021, only 7% of the total loan amount disbursed was for affordable housing, while 2020 registered 8%. The year 2018 witnessed the highest share of home loans disbursed for affordable housing in Bengaluru at 11%.

Affordable Home Loan Disbursements by Banks and HFCs in 2021

Source: TEAL Data (registered mortgages only)
  • In Mumbai, HDFC Limited leads with the highest total amount of loan disbursed for affordable housing among all the institutions in 2021.
  • Axis Bank was the leading private bank for affordable home loan disbursements in Maharashtra, while TamilNad Mercantile Bank emerged as the leading private bank in Hyderabad.
  • The State Bank of India recorded the highest number of registered mortgage transactions in Public Sector Banks in Mumbai and Pune, while Union Bank of India leads in Hyderabad.
  • HDFC Limited was the leading HFC for affordable home loan disbursements in Mumbai and Pune, while Can Fin Homes led in Hyderabad.
  • In Pune, State Bank of India leads with the highest total amount of loan disbursed for affordable housing among all the institutions in 2021.

Increase in Median Loan Amount Disbursed in 2021

Source: TEAL Data

2021 witnessed an increase in the loan amount disbursed in Mumbai, Pune, Bengaluru and Hyderabad. Mumbai witnessed the maximum increase in median loan amount disbursed - a 14% rise from Rs 52.8 Lacs in 2020 to RS. 60 Lacs in 2021. Hyderabad recorded an 8% increase in median loan amount in 2021. Pune and Bengaluru registered a 3% and 4% rise in 2021 respectively.


References:

[1] https://www.thehindu.com/real-estate/affordable-housing-within-reach/article37227287.ece

[2] https://www.tealindia.in/research/affordable-housing-report

[3] https://pmay-urban.gov.in/credit-linked-subsidy-scheme


At TEAL, we are building the next generation of property due diligence using big data analytics and machine learning. We provide reliable information about property ownership, registration status, disputes, tax compliance history and all other information that you will need to make a safe and secure property investment. To learn how TEAL can help you in your journey, visit tealindia.in.

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