Affordable housing safer bet for lenders with under 1% NPA: Cibil

Cibil on Wednesday said loans meant for affordable housing has shown a robust 23% CAGR over the past five years, while the delinquency rate has been firmly under control at around 1%.

With higher loan growth rate of 23% over almost the past five years and low delinquency rates of under 1%, the affordable housing segment offers strong growth opportunities for lenders, says a report.

A study by credit information company Cibil on Wednesday said loans meant for affordable housing (home loans of under Rs 10 lakh ticket size) has shown a robust 23% CAGR over the past five years, while the delinquency rate has been firmly under control at around 1%.

In 2016, the affordable housing loan book stood at Rs 30,400 crore extended to around 7.5 lakh borrowers.

"The golden lining is that there have been low delinquency rates on affordable housing loans over the past five years. These trends indicate a very growth potential for lender," the report said.

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The study said the average ticket size in the segment has been coming down from around Rs 4.8 lakh in 2009-10 to nearly Rs 4.1 lakh now, possibly suggesting the lenders' success on the financial inclusion drive.

"Looking at the average ticket size, we expect to witness more and more small banks and micro-lenders getting in affordable housing lending in the coming years," Cibil chief operating officer Harshala Chandorkar said.

"The possible reason for the steady growth in the affordable housing loan segment is the increase in lending towards the bottom of the pyramid. In consideration of the rise in home prices, this could be seen as a significant development indicator," she added.

The study found that Maharashtra, Madhya Pradesh, Gujarat, Tamil Nadu and Andhra Pradesh are the top five states with highest number of affordable home loans in the last five years, contributing around 60% of the total such accounts opened.

Maharashtra holds the top spot with the highest number of accounts (over 6.53 lakh) followed by Madhya Pradesh (5.60 lakh), Gujarat (3.13 lakh), Tamil Nadu (2.65 lakh) and Andhra Pradesh with 2.28 lakh such accounts.