Mirroring the overall slowdown in the economy, home loans — which constitutes almost 50 per cent of the total consumer credit portfolio — saw a slower growth of 10 per cent in outstanding balances during the quarter ended December 2019 as compared to 20.3 per cent in the same period of last year despite a series of rate cuts by the RBI.
According to data available from credit information company TransUnion Cibil, the growth in outstanding balances has slowed down for housing finance companies (HFCs) with their balances increasing by 7.9 per cent in Q3 of 2019 as against an increase of 23.2 per cent in the same period of last year. Affordable housing segment, defined as loan size up to Rs 25 lakh million, saw the lowest growth of 4.1 per cent in Q3 2019.
Outstanding home loan balances were at Rs 19,07,300 crore involving 14.20 million accounts. While banks had slashed home loan rates several times in 2019, following the 135 basis points (bps) reduction in repo rate by the Reserve Bank of India (RBI) in the calendar year, these steps have failed to boost home loan offtake.
“We are expecting the Finance Minister to take corrective measures that would ease the liquidity challenges the sector is grappling with. The ease of liquidity can enable the buyers to make purchases and also support the idea of housing for all. A real financial impetus to the real estate sector can come with a major overhaul in terms of GST relief and curtailing home loan rates,” said NAREDCO president Rajan Bandelkar.
Even overall outstanding loan balances across all major consumer lending products showed a slower growth of 13.1 per cent year-on-year (y-o-y) as compared to 23.2 per cent growth in Q3 of 2018. “Although still strong, this is now the sixth consecutive quarter where growth in credit balances has decelerated,” Cibil said.
This growth is not uniform across all the major consumer lending categories, it said. The consumption lending categories of credit cards and personal loans saw growth rates of 40.7 per cent and 28.0 per cent, respectively, in Q3 of 2019, whereas auto loans, loans against property and home loans recorded comparatively moderate rates of balance growth at 10.3 per cent, 11.6 per cent and 10.0 per cent, respectively.
“Our findings suggest the shift toward consumption lending categories is becoming more sustained and is supported by a strong demand for these products. Consumer inquiry volumes for personal loans and credit cards increased significantly over the period, whereas we saw inquiries were broadly unchanged or slightly down for loans against property and home loans.” said Abhay Kelkar, VP—research and consulting, TransUnion CIBIL.
Outstanding balances in loan against property also showed a slower growth of 11.6 per cent to Rs 459,100 crore by December 2019, compared to 29.0 per cent a year ago, it said. Cibil said loan delinquency rates have risen by 52 bps in the case of loan against property, 13 bps for home loans and 10 bps for credit cards. However, overall balance-level serious delinquencies showed a relatively small increase of 10 bps y-o-y in Q3 2019. Overall delinquencies actually improved for auto loans (down 22 bps) and personal loans (down 5 bps).
Significantly, overall delinquency rates increased by 51 bps in Q3 2019 for NBFCs, which continue to show signs of stress. At the same time, delinquency rates for public sector undertakings and private banks have declined by 26 bps and 9 bps, respectively, on a y-o-y basis. Any account that has not been paid past the due date is considered delinquent. Credit card outstanding balances and number of accounts increased by 40.7 per cent and 29.8 per cent, respectively, taking total balances to Rs 109,000 crore and active cards in circulation to 44.5 million.