India’s Housing Finance Sector
India’s housing finance sector in 2024: The highs and lows
India’s housing finance sector is booming, making dreams come true for many. The housing finance industry is the hero behind countless new homes. Thanks to Indian housing finance, buying a home has never been easier. With the rise of real estate finance in India, there’s support for every home dreamer. Wondering who’s leading the charge?
There are many contenders for the top housing finance companies in India. The home loan industry in India is also growing, making the whole housing finance sector in India a key player in our nation’s story.
The government came up with a special plan named Pradhan Mantri Awas Yojana (PMAY) to boost the housing finance sector in India. What’s it all about? Well, they have a big goal in the housing finance industry: they want to build 2 crore new houses in 305 different places. This includes both our cities and our villages, a significant step for Indian housing finance.
Now, let’s say you want to buy one of these homes, but you don’t have all the money. So, you think of borrowing some. Here’s where the government steps in to help in real estate finance in India. If you borrow up to Rs 9 lakh, the government says, “We’ll help you by making sure you pay less interest on this money.”
And if you borrow up to Rs 12 lakh, they’ll help even more. What if you’re from a village and need a smaller amount, like Rs 2 lakh? Don’t worry, they’ve got your back too with the best housing finance company in India!
This plan is super helpful for many people, especially those who might not have a lot of money or those who work in jobs where they get paid daily or weekly. Because of this great support from the home loan industry in India, more and more people are thinking. The government really wants to make sure everyone has a roof over their head in the housing finance sector in India.
Recently, there’s been a rise in these NPAs, non-performing accounts, especially in the affordable housing sector. Here’s a clearer picture: A few years ago, out of 100 people who took a Rs 2 lakh loan, about 6 couldn’t pay back on time. But two years later, that number increased to almost 9 people. Similarly, for those who borrowed Rs 5 lakh, more people are now struggling to pay back.
Why is this happening? One big reason is that many of these borrowers work in jobs that don’t have fixed salaries or regular paydays, like daily wage workers or small shop owners. Earnings can fluctuate. To add to their troubles, a new tax system called GST was introduced. This tax affected their earnings, making it even harder for them to save money and pay back their loans. This information comes from ICRA Ltd, a company that checks how credit-worthy businesses and people are.
However, there’s some good news too. People who borrowed money for more expensive homes (like big apartments or luxury houses) are mostly paying back on time. In this group, out of 100 people, about 98 are returning their loans without issues.
When inflation goes up, the interest rate on loans usually goes up too. This is a crucial aspect of real estate finance in India. Why does this matter? Well, when interest rates are low, many people think, “Great! I can borrow money and buy a home.” And most of them can pay back the loan without problems.
But when inflation rises and interest rates go up, fewer people want to borrow money because it becomes more expensive to do so. And those who have already borrowed might find it harder to pay back, leading to more ‘loan defaults’ or missed payments.
In simple words, if things become more expensive (high inflation), it can make getting and paying back home loans more challenging.