Growth in offtake of home loans continued to slow in September despite aggressive marketing by banks.
According to data released on sectoral deployment of credit by the Reserve Bank of India, home loan disbursements came in at 11.2% for September compared with 15.6% in the corresponding month last year.
The lenders, which typically wait till September-end to roll out offers and tap increased spending during the festival season, started offering discounts much earlier this year, led by Union Bank of India, State Bank of Bikaner and Jaipur and Indian Bank.
However, a slowing economy, a weak job market and general uncertainty regarding the future are keeping consumers away from making use of these offers.
“There is an economic slowdown and people do not expect growth to pick up in the short term, because of which they are deferring purchases of big-ticket items like homes and white goods,” said Ram Sangapure, general manager - retail banking with Central Bank of India.
To be sure, overall growth in personal loans also declined to 12.6% from 15.2% last year.
Several banks, including large ones like State Bank of India and HDFC Bank, are offering special discounts on retail loans as growth in corporate credit has fallen significantly. Many have waived processing fees, while some are offering concessions on interest rates.
R K Bansal, executive director, IDBI Bank, pointed out that the interest rates are still high and real estate prices are moving up rather than down, whereas people’s incomes have not gone up as much. “Most of these offers are likely to be extended till the financial year-end. Banks call these festive season offers, but then make it permanent,” he said.
Also, larger banks are expected to have grown their portfolios at the expense of smaller ones. SBI, the largest of them all, is seen reporting robust growth in home loans for the second quarter as a result of the cut in home loan rates in August.
The top five banks saw a 20% growth in mortgage loans in the second quarter, said an analyst with Emkay Global, requesting anonymity. According to him, this “implies that smaller players
have lost market share to larger ones”.
Bankers hint at a slight uptick in home loans in October, albeit lower than last year.
“The demand for home loans has gone up post the festive offers. The processes are going on, maybe disbursements are taking time. It may reflect in the growth numbers with a lag,” said a senior official of a large public sector bank, who did not wish to be named.