Banks outrun NBFCs in home loan growth

MUMBAI: The tables have turned. Indian banks are gaining at the expense of mid-size and small non-bank lenders as far as fresh home loan mortgages are concerned.While most large banks like State Bank of India, ICICI Bank and Kotak Mahindra Bank relied on home loans to post strong retail growth in the September quarter, non-bank lenders such as PNB Housing Finance, L&T Finance and LIC Housing Finance saw mortgage loan growth contract over last year. Mortgage market leader Housing Development Finance Corp, however, continued to post growth.Industry watchers said despite the presence of more first-time homebuyers in the market than a year earlier, most large banks grew their books by luring NBFC clients to transfer their existing home loans to them with record low interest rates.“There are a lot of balance transfer cases that are happening because the larger lenders with comfortable liquidity are able to offer low interest rates, so over the next six months all the large lenders will get back to their pre-Covid volumes even if the overall housing market does not recover,” said Mahesh Misra, the chief executive of India Mortgage Guarantee Company which guarantees home loans for SBI, HDFC, ICICI Bank and Axis Bank among others.79380244Mortgage loan sales have also been aided by low levels of interest rates and concessions offered by lenders to entice homebuyers. Large banks and non-bank lenders are lending at never seen before rates of 6.7-7.2% to buyers with good credit scores.One of the gainers is ICICI Bank, which crossed the ₹2 lakh crore mark in mortgage loan portfolio in November, with a good part of the incremental growth coming in from balance transfers. SBI grew its mortgage book at a healthy pace with home loan sanctions up 29% in September quarter over a year earlier.Other banks also have increased their home loan portfolios, with low rates helping them attract customers. Private lender Kotak Mahindra Bank is offering rates as low as 6.75% to customers wanting to transfer their home loan balances, while the rates start at 6.9% at Bajaj Finance. Major non-bank lenders, meanwhile, lost out in the race, though industry executives said this would be temporary.“This is a minor blip in the home loan growth journey; we will again bounce back in the coming quarter. In fact, month on month disbursements for home loans have grown, which are not reflecting in the September numbers,” IIFL Finance chairman Nirmal Jain said.IIFL Finance recorded 2% growth from a year earlier in its mortgage book at the end of September. For LIC Housing Finance, almost 2-3% of its loans were transferred out in the September quarter, while 4-5% of its incremental disbursements were towards balance transfer.

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