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The Real estate boom may be over for speculators but not for housing finance companies (HFCs). Despite a drop in big ticket loans, most HFCs are reporting a sharp rise in small loans across the country. Also, individual loans, which have gone up, are now the preferred segment, as compared to corporate and institutional loans.
Both trends suggest the housing finance market is moving towards actual users, or people who buy houses to live in them.
LIC Housing Finance general manager A K Gangooly says there are two reasons for rising demand in small ticket loans. Limited capacity of salaried people who are actual users and second, a fall in demand for high value flats in the absence of speculators."
Says GIC Housing CEO Vijay Joshi, "The demand for the small loan bracket is the highest today as real estate has turned towards actual users."
With the market changing in character,HFCs are re-orienting their strategies. GIC is one example,focusing more on this segment- for loan amounts ranging between Rs 3-7 lakhs.
SBI Home Finance is not far behind. SBI Home Finance chief M L Chandra says lower value flats are now a potential growth area as in most parts of the country barring Mumbai, Delhi and some premium parts of Bangalore. Average flat prices in any case vary between Rs 5-10 lakh.
Along with small-ticket loans, individuals have become a major focus area for all HFCs.
While they - individuals - always constituted a large percentage of HFC portfolios, the difference today is that HFCs are more keen to cater them instead of high-value clients like corporates and developers.
HDFC, for example, has taken a deliberate decision to tone down its thrust on these two categories.
GICFC and LICFC, relatively new entrants in these two sections, are not wasting time, already re-orienting their strategies. "We have decided to go slow as far as builders are concerned," says LIC's Mr Gangooly.
SBI Home Finance is an interesting case in point where the ratio of individuals to corporates and builders has reversed.
"We are increasing our exposure towards individuals, infact we have decided that 70 per cent of the incremental loan should go to individuals this year," Mr Chandra said. MT commissioned Indian Market Research Bureau (IMRB) to conduct a five-metro opinion,poll.The universe of 2,400, split almost evently among Mumbai, Delhi, Calcutta, Chennai and Bangalore, rated theirs and other cities on a range of points.Mostly graduates, mostly in the Rs 3,000-10,000 a month income range, aged 25 to 39, professionals, traders, and a third female, the spectrum respods broadly in the same way.Bangalore and Mumbai top most of ten.Delhi dunks out - surprised? We will bring you another set of findings of this poll conducted last month in subsequent issues.
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