Home loan sops to help DDA allottees

Many of the 5,238 individuals, whose names figured in the draw of lots by the Delhi Development Authority (DDA) On Tuesday could be among the first beneficiaries of the new home loan package announced by public sector banks.

The new DDA flat buyers, who will pay between Rs 7 lakh and Rs 77 lakh, will gain from the 9.25 per cent interest rate ceiling on new home loans of up to Rs 20 lakh.

But a majority of the existing borrowers of private and public sector banks and housing finance companies will miss out on the government-driven initiative.

According to Indian Banks’ Association (IBA) data, at the end of March 2008, home loans up to Rs 20 lakh accounted for nearly 80 per cent of the total portfolio, which was estimated at Rs 2,55,653 crore.

 

In terms of number of borrowers, the share was similar, though detailed data are unavailable. Bankers said a majority of the borrowers, who had accessed housing finance facilities, had borrowed less than Rs 20 lakh.

For instance, in case of State Bank of India, which had a market share of 18 per cent at the end of September this year with total home loans outstanding of around Rs 51,000 crore, the average size was Rs 6-8 lakh, a senior bank executive said.

A Bank of Baroda executive said the ticket size of home loans is Rs 6-8 lakh, which is the average for public sector banks. Most of the loans are concentrated in urban and semi-urban areas.

“The scheme should broadbase the home loan business in the Rs 5-20 lakh category,” a Bank of Baroda executive said.

The number of home loan accounts in small towns and semi-urban and rural areas is substantial, the executive said.

Even in case of private sector lenders, the situation is much the same. Axis Bank said majority of its borrowers have opted for home loans below Rs 20 lakh.

While HDFC, the country’s largest mortgage player, did not disclose the data, it said that a majority of the loans were below Rs 20 lakh, with the average ticket size at Rs 15 lakh.

A Dewan Housing Finance executive said 80 per cent of the disbursements were less than Rs 20 lakh, with the average loan size estimated at around Rs 6 lakh.