Drop in home loan demand hits Q2 retail credit growth

Feb 6, 2024



Mumbai: Retail lending slowed in Q2FY20, data TransUnion CIBIL Has shown. There has also been a significant increase in defaults on personal loans and credit cards during the same period.
This slowdown in retail loan growth stems from the lack of growth in home loan disbursements during the period, led by a decline in originations in the affordable housing category below Rs 35 lakh.
During the quarter ending September 2023, the value of home loans witnessed a growth of 9% compared to the year-ago period. However, the volume of low value home loans (less than Rs 35 lakh) – which constitutes 76% of the original – declined by 4%, impacting the overall growth in new home loans.
In contrast, home loans worth Rs 75 lakh and above, which constituted 7% of the total origination volume, saw a significant growth of 23% year-on-year. This change in loan ticket size correlates with rising property prices in 2023.
According to Sybil Loan defaults have worsened in the data, credit card and personal loan sectors but all other categories have improved. Delinquencies on credit cards increased by 23 basis points (100 bps = 1%) to 1.7%, while delayed payments on personal loans increased from 10% to 0.9% of the loan portfolio.
Overall, except for a slight decline in credit cards and personal loans, the remaining level of serious defaults (defined as delinquencies of 90 days or more) across product categories continued to improve. This improvement is reflected in the CMI The indicator for consumer performance, which increased by 11 points from 90 in September 2022, to 101 in September 2023.
Despite a 27% year-on-year growth in outstanding amounts for personal loans, their overall share in the retail credit portfolio saw a marginal growth of 20 bps.
“Growth opportunities in India's credit sector are abundant with emerging young consumers, untapped new-credit consumers as well as growth in rural and semi-urban consumer bases. To take advantage of these opportunities, lenders need to offer credit to eligible consumers. should be identified and access should be facilitated to give them credit,” said Rajesh KumarMD & CEO, TransUnion CIBIL.
“At the same time, lenders must continue to prioritize strong underwriting practices and regular, nuanced monitoring of consumer behavior to drive sustained loan growth and profitability.”



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