As the pandemic raged, people took to the safety of homes, literally.
Banks home loan portfolios jumped up to 14% in the first quarter despite a rise in Covid cases and restrictions due to the pandemic.
The home loan portfolio of the State Bank of India increased 11 per cent to Rs 5,05,473 crore in the first quarter of the current fiscal ended June 30, 2021, compared with ₹4,55,443 crore in the year-ago period. It forms constituting 23 per cent of the bank’s total domestic advances.
Home loans at Canara Bank increased 13.15 per cent during the first quarter to Rs 65,136 crore. In the previous year, the growth in the portfolio was only 10.6 per cent. Punjab National Bank saw a 6.1 per cent growth in home loans.
Rising ticket size
HDFC saw its average loan size jump from Rs 27 lakh to Rs 29.5 lakh during the Covid pandemic as borrowers sought larger homes with many companies shifting to work-from-home mode.
Even as the average property value purchased by borrowers during the pandemic rose, the affordability of loans for borrowers improved to a 25-year high.
The affordability is measured as the number of years of income required to buy a house.
The affordability improved to 3.2 years of income as against 3.3 years in FY20 and 2.5 years in FY19. This was largely because the annual income of borrowers rose from Rs 15 lakh to Rs 16 lakh even as property values remained at FY18 levels. The average age of the borrower also dipped from 39 years to 38 years.
Growing competition
ICICI Home Finance has launched an on-the-spot home loan for workers and self-employed who do not have income tax returns (ITR) to show their earnings.
Under the ”Big Freedom Month”, ICICI Home Finance aims to assist home loan seekers who do not have income tax returns proof to buy their dream home, it said in a statement.
Carpenters, plumbers, electricians, tailors, painters, welders, auto mechanics, and auto taxi drivers, among others, can avail of the spot home loan by submitting PAN card, Aadhaar card and bank account statement of the past six months.
Prospective homebuyers can visit the ICICI HFC branch to get free consultation from experts.
SBI is also focusing on home loans. It announced a 100 per cent waiver on processing fees till August 31. Before the offer, the processing fee was 0.40 per cent.