Pick up in realty urges banks to shift to home loans
By Joseph Samson
Dec 21, 2009
Print    Email    RSS   

In India, the ratio of mortgage to gross domestic product (GDP) is low at 7 percent indicating a huge potential in the housing sector in the coming years. This ratio stands at 12 percent for China, 41percent for Hong Kong and at least 80 percent for most developed countries.

While housing finance companies (HFCs), regulated by National Housing Board, were predominantly catering to the real estate sector, banks too have started increasing their exposure in the sector.

This is evident from the fact that market share of HFCs decreased from nearly 65 percent in 2001 to 55 percent today. Banks, on the other hand have been consistently increasing their share, thus intensifying the competition.

The pick up in real estate prices coupled with various low interest schemes have resulted in surge in real estate sector in the past few months.

SBI announced a special home loan scheme in February and was followed by other government -owned and private banks to ensure their presence in the sector. The housing sector has witnessed significant surge in volumes, especially in the "affordable housing sector".

Housing Finance Companies feel that increasing share of banks' in the home loan segment is a temporary phenomenon. They say that banks are likely to come across asset-liability mismatch as these loans have a long gestation period. Further, these loans are a zero-sum game in the initial period due to lower interest rates offered. HFCs, on the other hand, typically, raise money that match their requirements and thus reduce the asset-liability mismatch.


(Comments Posted : 0) Post Your Comments
Show All Comments
 Select a product:

 Select a product:

What if you default on your loan?
Know your home loan better
The Home Loan Rate Pendulum
Refinancing your home loan: is it a...
Should interest rate only be considered in...

PINJORE: CaℒL Giℛℒs In PiNjOrE 09915787550...
PINJORE: CaℒL Giℛℒ In PiNjOrE 09915787550...
how to gate my home loan certificate

Canara Bank earned a profit of 60%. Feb 6, 2015
New Branch of Laxmi Vilas bank at Vijayawada Jan 30, 2015
Home loan EMIs expected to drop down Jan 21, 2015
Corporation Bank received MSME banking excellence award 2014 Jan 19, 2015
Home loan rates set to fall, after reduction in repo rate Jan 16, 2015
News Archive