Lenders hopeful of demand for housing and loans reviving later in the year
Home loan disbursements have come to a virtual standstill amid the national lockdown, but players are hopeful of a revival in demand later in the year with the resumption of business activities and low interest rates.
“Business began to be impacted about seven to eight days before the lockdown was announced. After that, our team has been working from home and cannot go anywhere. In housing loan, unless you see the property and do the verification and take legal documents and signature of customers, the loan cannot be disbursed. It is a ground level activity. The entire disbursement has been put on hold,” said Deo Shankar Tripathi, Managing Director and CEO, Aadhar Housing Finance.
He said the company had sanctioned about ₹500 crore of loans that were to be disbursed in March and April. “In many cases, even the cheques were ready,” he noted.
While from April 20, NBFCs and HFCs have been allowed to function, Tripathi said about 40 to 45 branches of Aadhar HFC are now open but they are in smaller towns where there is not enough demand.
Another housing finance player noted that disbursements are not taking place as the customer needs to physically sign documents.
“Other retail loans can be disbursed online but this is not the case with housing loans. Additional disbursements of existing loans are taking place,” he said, adding that some approvals are also being made.
According to a report by 99acres.com, property sales and new launches dipped in the first two months and came to a grinding halt after the outbreak of novel Coronavirus.
New launches deferred
“In the face of a nation-wide lockdown, developers deferred all new launches and festive offers at least for the next two to three quarters. Unsold inventory stood at 6.48 lakh housing units across the top eight metro cities,” it noted.
Banks too are reporting little interest on housing loans as of now but are hopeful of a revival in demand later in the year. “With the lockdown in place, there is hardly any credit appetite. Also with the economic uncertainty, people are on wait-and-watch mode,” said a banker.
But with repo rate to a 15-year low of 4.40 per cent, there is expectation of a gradual revival in demand for home loans, especially from salaried individuals although players said it is just one of the factors that go into the decision to buy a home.
Gradual revival seen
“We will certainly see demand coming back, especially in the affordable to middle income housing segments. The high end market could see some bit of pain. When it will come back is difficult to gauge at present,” said the head of a housing finance company, adding that builders who are sitting on unsold inventory, will also offer attractive prices.
Tripathi also is optimistic of a gradual revival in demand. “Organised salaried segment, where income has not been impacted, will definitely go for buying a home.”
Maneesh Upadhyaya, Chief Business Officer, 99acres.com said, “The industry expects home buyers to returning to the market only gradually as social distancing restrictions get lifted, even though prices are likely to come down. Pro-realty measures announced by the government, including loan moratorium and repo rate cut by 75 basis points have helped soothe the sentiment of uncertainty among homebuyers, but the industry is looking to more support from the government.”