Value of housing loans in India FY 2018-2023

In financial year 2023, banks in India advanced over 2.5 trillion Indian rupees in housing loans crossing pre-COVID levels. This reflected renewed homebuyer sentiment, as an increasing number of Indians were investing in buying residential property.

Growth of home loans market

Forty years ago, home loans were an alien concept. People would direct their provident fund savings and retirement benefits toward buying a home. However, three key institutions: HDFC, ICICI Ltd, and the State bank of India with their new lending concepts led to significant changes in the home loan market. Currently different commercial banks, NBFCs, and housing finance companies have flooded the mortgage market, and giving prospective home buyers from diverse strata of society with bargaining power and a chance at affording a home.

Inflation and home loans

  India is not untouched by global inflation. To address the problem, the Reserve Bank of India hiked the repo rate four times since April 2022 to 5.9 percent. Consequently, leading banks and housing finance companies raised their lending rates. For a prospective homebuyer, this meant a rise in tenure for home loans. In other words, equivalent monthly payments (EMIs)for homebuyers have lengthened and become more expensive. In financial year 2022, banks in India advanced around two trillion Indian rupees in housing loans almost reaching pre-COVID levels.