Changing Profile of the Housing Loan Buyers In India..!

by Mr. Vaithianathan Ramachandran, Tata Capital Housing Finance

* An estimated shortage of about 2.2 crore houses by 2014

* The average age of the home loan buyer from the mid- 40's to the mid-30's over the past 2 decades.

* Growing segment of under 30 year olds who are buying homes and taking loans for the same.

* Growing segment of house buyers who buy a second house for investment purposes.

A house will always have a deep connection with every individual and buying one’s own home is fondest dream of almost every Indian.



Vaithianathan R
The housing industry in India has been growing at a robust about 15% and is projected to continue to grow for the next few years.

There is an estimated shortage of about 2.2 crore houses by 2014, and the government and apex bodies such as the National Housing Bank (NHB) are playing a vital role in trying to fill this gap.

Profile of Home Loan Buyer...!

The growth in this sector as well as the changing profile & consumption behaviour of the upwardly mobile population have also brought about a sea change in many aspects of the industry, and most notably the profile of today’s housing loan buyer.

One of the most evident changes is the decreasing age of the housing loan buyer. There has been a trend of reduction in the average age of the housing loan buyer from the mid- 40's to the mid-30's over the last two decades. There is also a growing segment of under 30 year olds who are buying homes and taking loans for the same.

The rising income levels of this segment coupled with growing aspirations have been major causes of this change in profile.

Another major contributor to this phenomenon is the easier access to credit fuelled by banks and housing finance companies (HFCs).

Most loan providers view housing loans as a high growth product and have been diverting focus to it in the last few years.

Purpose of Housing Purchase..!

Another aspect that has changed is the purpose of a housing purchase. While purchasing a house for the purpose of living in it still remains the major reason, there is a growing segment of house buyers who buy a second house for investment purposes.

 

They also could take a larger housing loan for the same as they are aware of the income tax benefits that they can avail of as a result of it.

Financially savvy investors are now making use of these multiple benefits of a housing loan. As long as there is a significant growth in the housing sector and appreciation of prices, this segment will continue to grow.

It is estimated that the Indian mortgage market accounts for 7% of GDP (Gross Domestic Production) and about two-thirds of the savings of customers availing housing loans are deployed in payment of EMIs.

Attractive interest rates and ease of credit access here too contribute to the growth of this profile among home loan buyers.

A large chunk of growth in housing loans is now coming from tier I & II cities, with the metros approaching a saturation point. The new segment of housing loan buyers now come from high growth areas such as Pune, Bangalore, Ahmedabad and other non-metro locations.

As a product segment, the growth has been seen in ‘affordable housing’, with a loan ticket size in the range of Rs. 25 lakh to Rs. 40 lakh. Banks and HFCs offer their most attractive rates for this range, and this has fuelled its growth.

Developers / promoters have begun shifting their projects to newer non-metro locations or on the outskirts of large metros. This has helped in de-congestion of many cities and banks and HFCs also provide a pre-approval for housing loans for most of these projects.

Today’s housing loan buyer is an empowered individual. Not only is he spoilt for choice, both in terms of properties to buy, but also in terms of home loan providers willing to fund his purchase. He has access to information, is more financially aware and will have multiple banking or /  financial service relationships.

To cater to this new profile, banks & HFCs will have to value-add and provide high levels of personalised and dedicated service, both at the time of sale as well as through the duration of the loan.

— The author Mr. Vaithianathan Ramachandran, is MD at Tata Capital Housing Finance


Mr. R. Vaithianathan (R.V)
Vaithianathan R
Mr. Vaithianathan Ramachandran is the Managing Director (MD), Tata Capital Housing Finance Limited and Head - Consumer Finance & Advisory Business comprising Mortgage Loans, Auto Loans, Personal & Business Loans, Rural Finance and Wealth Management. 
He brings above 34 years of industry experience encompassing accounts, finance, regulatory, inventory control and various other areas of expertise. His last assignment was as General Manager-Credit Control & Receivables, Tata Motors Limited. He handled various finance functions including the All India Sales Finance function.

From the year 2000 onwards, he was the Credit Controller for Tata Motors for all its products. He was associated with above than 100 automobile dealerships and abetted reorganization of the dealers’ financials to enable them to turn around their business and reap profits.

From 2007 to 2008, he headed the Operations & Credit function of Tata Motor Finance Limited. There on, he was in charge of the Operations function of Tata Capital Limited and the Credit function of the Consumer Finance and Advisory business.

 He started his extensive career in 1978 as an Accountant with Madras Fertilizers Limited where he was in charge of Inventory control, MIS reports and Cash Sales Analysis. Two years later, he was appointed as a Finance Officer at Southern Petrochemical Industries Limited after which, he functioned as an Accounts Officer at Hindustan Teleprinters Limited from 1981 to 1983.

R. Vaithianathan (R.V) is an honours graduate from Madurai University and is a qualified Chartered Accountant and Cost and Works Accountant. He has also completed the “Management Development Programme” from IIM-Ahmedabad.

For media queries, please write to 
corporatecommunication@tatacapital.com


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