PSU Banks Hold On To Home Loan Market Share But...
Public sector lenders managed to hold on to market share in the increasingly competitive home loan market but private peers have captured the most lucrative parts of it. Housing finance companies have lost some share in the upper end of the market while holding on to a chunk of the affordable housing loan segment.
Data from credit bureau CRIF High Mark shows that:
PSU banks have retained the largest market share in housing loans by value and volume, at near 45% over the last 3 years.
As of December 2020, the top five public sector banks held nearly 30% of home loans by value.
Private banks have a relatively smaller share of 17% by value.
As of December 2020, top five private banks constituted 15% of outstanding loans by value.
HFCs have an overall market share of nearly 37% by value.
The top five out of the nearly 140 HFCs and non-bank finance companies constitute 27% of the home loan portfolio. Two companies constitute 61% of the share of HFC market by value and 49% by volume.
The bureau, however, pointed to a shift in relative standing of lenders within different segments of the home loan market.
“Over the last three years, public sector banks have increased their lending in mid and premium segments with a gain of near 7% share in both segments by market size,” the report said. “Public sector banks are dominant players by value, while HFCs have a relatively lower but significant share in the affordable (< Rs 35 lakh) and mid range (Rs 35-75 lakh) segments.”
Private banks, that, in the absence of other large lending opportunities have focussed on home loans, have instead kept the focus on the premium segment.
“Private banks dominate the premium (above Rs 75 lakh) segment surpassing HFCs as of December 2020,” the report said. In this segment, the share of HFCs has fallen from 40.8% in December 2018 to 33.4% in December 2020.
Private and public banks have both gained share from HFCs. Private banks held 34.5% share of the premium segment as of December 2020 compared to about 32% in December 2017.
PSU banks have gone from 20% to 27% share over this period.
Millennials Want To Buy And Not Just Rent...
Contrary to the view that younger Indians are less focussed on home purchases and happy to rent rather than buy, CRIF High Mark’s report shows that this segment of buyers makes up a material part of the market.
The share of buyers of between 25 and 36 years was at 27% in the annual originations in FY2020-21 till December 2020. Comparable data for previous years is not available.
For young borrowers, a majority of loans fall in the affordable segment, with fewer loans outstanding in the mid and premium categories. But loan ticket sizes for these borrowers are on the rise.
The average ticket size of a housing loan given to this segment of borrowers has continued to increase over the last five years at a compounded annual growth rate of 6.2%.