Home, auto loan inquiry back to 2019 level, yet to reach pre-Covid mark

In home loans, inquiry volumes were at 112 per cent of July-August 2019 levels

Driven by pent-up demand, the inquiry volumes for home and auto loans in India during July-August 2020 are back to 2019 levels in the corresponding period, according to CIBIL.

In the home loans, inquiry volumes were at 112 per cent of July-August 2019 levels, in loan against properties (LAP) 90 per cent of Jul-Aug 2019 level, and 88 per cent for auto loans.

As the economy reopens, we are seeing a rebound in the retail credit demand. The growth in both the real estate and auto sectors is expected to remain sluggish. It will be important to observe how the demand for home and auto loans shapes up in the near future, CIBIL said in a statement. TransUnion CIBIL is a credit information company.

The public sector lenders saw the biggest rebound in inquiries in July and August 2020, most likely because they were early in recommencing operations than their Private and finance counterparts. The lockdown, imposed to contain the spread of Covid-19, did impact consumers’ ability to apply for credit as lender branch offices functioned with very limited capacity. The economic uncertainty caused lenders and consumers to take a cautious approach to borrow.

However, this also resulted in a level of pent-up demand, which has now started to come through, CIBIL said in a statement.

Although not back to the pre-Covid levels seen in January and February 2020, inquiry volumes have started to recover from their troughs in April and May 2020, and in July and August, 2020 were similar to levels seen during the same period in 2018.

The uptick in home loan enquiries could possibly be due to lenders completing the pending transactions that had been halted at the onset of Covid-19. Another factor at work may be consumers seeking to transfer existing home loans to lenders offering better interest rates consequent to rate cuts announced by the regulator.

The increased inquiry volumes for auto loans for July and August 2020 could be attributed to consumers seeking vehicles due to the limited availability and rising fear of commuting via public transport.