Home loan ticket-sizes witness rise across cities

Indian home loan borrowers seem to be shedding their aversion to taking on huge debts, particularly when it comes to home loans. A study by Credit Information Bureau (Limited) India, or CIBIL, has revealed that the contribution of high-value home loans to the housing finance space in the country has been rising steadily. The trend is seen across metros and tier III cities, although, expectedly, it is more pronounced in Mumbai, Delhi-NCR, Kolkata, Chennai, Bangalore and Hyderabad. Here, the share of loans over Rs 50 lakh has increased from around 7% in 2007 to over 12% in 2011. During the same period, loans with a ticket-size lower than Rs 10 lakh have shrunk from 40% to 21%. Moreover, loans with ticket sizes between Rs 20 lakh and Rs 50 lakh made up close to 35% of the total home loans sanctioned in 2011. According to the credit information company, the trend is a result of appreciation in property prices in the country as well as growing affordability of the home loan borrower.

In category B cities, namely Pune, Nagpur, Ahmedabad, Gwalior, Lucknow and so on, the proportion of home loans with a value of less than Rs 10 lakh has declined to 43% in 2011, compared 69% in 2007. Loans with ticket sizes of Rs 10-20 lakh cornered the maximum share of home loans in these cities, with over 32% of the loans approved in 2011 falling in this bracket.

Interestingly, the other, much smaller, cities also replicated the shift away from low-ticket size loans, with such seeing a huge drop – from 80% to just 58% during the period. However, loans greater than Rs 50 lakh accounted for a meager 2% in these cities in the year 2011, with loans in the Rs 5-10 lakh group cornering the biggest chunk of sanctioned credit at 30%. Loans under Rs 5 lakh and the ones between Rs 10 lakh and 20 lakh clocked 28% and 27% of the total share respectively.