Home Loan Decline Sparks Concern Amidst Risk-Averse Lending

The December quarter saw a decline in home loans, with a credit report by Transunion Cibil highlighting a 9% decrease in volume and 3% in value. Riskier segments like personal loans and credit cards also faced reductions. Regulatory caution from RBI and changing consumer trends influenced this downturn.

In the latest financial quarter, home loans have experienced a significant downturn, with volumes dropping by 9% and the value seeing a 3% decrease, as revealed by a report from Transunion Cibil. This trend is reflective of a larger slowdown in riskier loan segments, including personal loans and credit cards.

The Reserve Bank of India's cautionary advice to slow down on unsecured loans echoes throughout the sector. The central bank's efforts to mitigate risk haven't stopped home loans from being a crucial growth segment, both economically and for credit expansion in banks.

Despite a slight improvement in long-overdue home loan payments, the overall demand for credit during the October-December 2024 period witnessed its slowest growth in two years. This was particularly noticeable in metro areas, although semi-urban and rural areas showed some growth.

(With inputs from agencies.)