Mumbai: The reduction in interest rates, coupled with rationalisation of home prices, has brought the price-shy home buyer back to the doorsteps of banks. Several banks said their home loan disbursals have increased towards the end of financial year 2009.
Housing Development Finance Corporation (HDFC) saw its loan disbursals during the first three months of 2009 go up by 17.5% to Rs 12,439 crore.
Keki Mistry, the company's vice-president and managing director, said, "New property has been built at a 10-40% lower cost than what it was 6-12 months backs. So, builders may be lowering prices".
The country's largest bank, State Bank of India (SBI), said loan disbursals have shot up. "We sanctioned loans of approximately Rs 3,000 crore between February and March (2009) after a brief period where there was a dip in disbursals. The numbers have been good in April too," said a senior SBI official who looks after retail assets.
The lower interest rate trigger lead to the growth in disbursal, the official said. "There is a good trend of applications. People are booking houses and asking for loans."
Other home financers such as LIC Housing Finance, Axis Bank, Union Bank of India have also seen bulging home loan portfolios in the last two months of FY09 and the growth continues in April 2009 as well.
"In March we have seen 42% growth in disbursements and overall in fourth quarter (January- March) we had 22% growth in disbursements," LIC Housing chief executive officer R R Nair told DNA Money in a recent interview.
S Govindan, general manager, personal banking, at Union Bank of India, said growth has been good in the fourth quarter. "We have disbursed about Rs 400 crore via 2400 accounts. Overall housing loan portfolio growth has been 27% for the entire year."
The bank's disbursals under the Indian Banks Association scheme (where banks agreed to provide small ticket home loans at low interest rates) have risen, he said. "We have disbursed about Rs 250 crore under 1,500 accounts under the IBA scheme," says Govindan.
Mistry of HDFC feels that builders focus on affordable housing is one of the reasons for the uptick in disbursals. "There was a time, when builders were concentrating on high-end houses. Today it is affordable housing. The average loan size in 2009 has been Rs 15 lakh. If one considers a loan to value (portion of the actual house price disbursed by loan provider) of 65%, the house may be about Rs 21 lakh," he said.
Sujan Sinha, senior vice-president, retail assets, at Axis Bank, felt there was also a seasonal angle to the rise in home loan disbursals. "Every year we see a bit of activity before we enter into monsoons," he noted.
"If the sentiment continues over the next quarter, we may see return to normalcy in next few months," Sinha added.
Source:DNA India