India Home Loan Market Size
| Study Period | 2020 - 2029 |
| Base Year For Estimation | 2023 |
| Forecast Data Period | 2024 - 2029 |
| Historical Data Period | 2020 - 2022 |
| CAGR | 22.50 % |
| Market Concentration | Medium |
Major Players
*Disclaimer: Major Players sorted in no particular order |
India Home Loan Market Analysis
India's Home Loan Market is valued at USD 300 Billion and is expected to register a CAGR of 22.5% during the forecasted period.
The COVID-19 pandemic had a significant impact on the home loan market in India. Before the pandemic, the Indian home loan market experienced steady growth. Factors such as urbanization increased disposable incomes, and government initiatives like PMAY drove the demand for housing finance. To mitigate the impact of the pandemic, the RBI introduced several measures, including significant reductions in the repo rate. These rate cuts resulted in lower home loan interest rates, making it more favorable for borrowers to avail of loans. The Indian government announced relief measures to support the real estate and housing sectors during the pandemic. These included liquidity support to housing finance companies, the extension of project completion deadlines, and temporary reductions in stamp duty charges in certain states.
India's home loan market is expected to double in the next five years, mirroring the overall trend in the country's aspirations to become a USD 5 trillion economy. The home loan market in India has experienced significant growth over the past decade, driven by increasing urbanization, rising disposable incomes, and government initiatives to promote affordable housing. Home loan interest rates in India can vary depending on the lender, loan amount, loan tenure, and the borrower's creditworthiness. Interest rates can be fixed or floating, and they typically range from around 6% to 10%, although they may be higher for certain categories of borrowers or riskier profiles. Many lenders offer online home loan application processes, making it convenient for borrowers to apply and track their applications. Online platforms also provide tools to calculate loan eligibility and EMI amounts and compare loan offers from different lenders. The Indian government has launched various initiatives to promote affordable housing and increase homeownership. Programs like Pradhan Mantri Awas Yojana (PMAY) and Credit-Linked Subsidy Scheme (CLSS) provide subsidies and interest rate benefits to eligible home loan borrowers.
India Home Loan Market Trends
Lower Interest Rates is Expected to Drive the Market
Lower interest rates have been a significant trend in the home loan market in India. The Reserve Bank of India (RBI) plays a crucial role in determining the interest rates in the economy. Through its monetary policy, the RBI adjusts key policy rates, such as the repo rate, which influences lending rates in the market. Lowering the repo rate makes borrowing cheaper for banks, enabling them to offer home loans at reduced interest rates. In recent years, the RBI has implemented a series of repo rate cuts as part of its efforts to boost economic growth and encourage borrowing. These rate cuts have a cascading effect on the interest rates charged by lenders, including banks and housing finance companies, leading to lower home loan interest rates.
The home loan market in India is highly competitive, with several lenders vying for borrowers. To attract customers, lenders often reduce their interest rates to offer more attractive loan products compared to their competitors. This competition among lenders has contributed to the overall decline in home loan interest rates. The Indian government has launched various initiatives to promote affordable housing and increase homeownership. These initiatives, such as the Pradhan Mantri Awas Yojana (PMAY) and Credit-Linked Subsidy Scheme (CLSS), provide interest rate subsidies and incentives for eligible home loan borrowers. The government's focus on affordable housing has put additional downward pressure on interest rates.
Rise in Affordable Housing
The rise in affordable housing has been a significant trend in the Indian home loan market. In the financial year 2022, the balance of property prices by annual income resulted in affordability of 3.2 for housing in India, the same as the previous year. Thereby, the affordability reached the lowest value since 2011, which makes housing more affordable. The Indian government has launched several initiatives to promote affordable housing and increase homeownership. One of the notable schemes is the Pradhan Mantri Awas Yojana (PMAY), which aims to provide affordable housing for all by 2022. Under PMAY, eligible borrowers can avail of interest rate subsidies and financial assistance, making homeownership more affordable. As part of the PMAY, the Credit-Linked Subsidy Scheme provides interest rate subsidies to home loan borrowers from the economically weaker sections (EWS), lower-income groups (LIG), and middle-income groups (MIG). The CLSS has played a crucial role in making home loans more affordable and accessible to a broader segment of the population.
The Indian government provides tax benefits on home loans, primarily through deductions on the principal repayment and interest payment components. These tax incentives reduce the overall cost of homeownership, making it more affordable for borrowers. Developers and real estate companies have recognized the demand for affordable housing and have focused on increasing the supply of such properties. The rise in affordable housing projects across the country has provided homebuyers with more options in terms of price, location, and amenities. Lenders have introduced specific home loan products tailored for affordable housing. These loans often come with competitive interest rates, relaxed eligibility criteria, and higher loan-to-value ratios, making it easier for borrowers to finance their affordable homes.
Technology has played a role in streamlining the construction and financing processes, leading to cost efficiencies in affordable housing projects. Innovative construction methods, such as prefabricated and modular construction, have helped reduce construction costs and improve affordability. The growth of affordable housing is not limited to major cities but has also extended to tier 2 and tier 3 cities. Developers and lenders are increasingly targeting these smaller cities and towns, where land and construction costs are relatively lower, contributing to the affordability factor.
India Home Loan Industry Overview
The home loan market in India was considered fragmented, with a large number of players operating in the market. There were several banks, non-banking financial companies (NBFCs), housing finance companies (HFCs), and cooperative banks that offered home loans to consumers. This fragmentation resulted in intense competition among lenders, leading to various loan products, interest rates, and customer service offerings. Some major players in the market are HDFC Housing Finance, LIC Housing Finance Limited, Indiabulls Housing Finance Limited, L&T Housing Finance Limited, and PNB Housing Finance Limited.
India Home Loan Market Leaders
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HDFC Housing Finance
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LIC Housing Finance Limited
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Indiabulls Housing Finance Limited
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L&T Housing Finance Limited
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PNB Housing Finance Limited
*Disclaimer: Major Players sorted in no particular order
India Home Loan Market News
- June 2023: In a major development, HDFC (Housing Development Finance Corporation) and HDFC Bank came into a merger on July 1, paving the way for the country's largest corporate merger. Following this, HDFC shares were delisted on July 13 and amalgamated into HDFC Bank.
- May 2023: LIC Housing Finance (LIC HF) is expected to expand its branches in new geographies, increase focus on high-yielding loan against property (LAP), and intensify recovery efforts as it consolidates its position as the largest housing finance company after the merger of larger rival Housing Development Finance Corp with its banking arm.
Table of Contents
1. INTRODUCTION
1.1 Study Assumptions and Market Definition
1.2 Scope of the study
2. RESEARCH METHODOLOGY
3. EXECUTIVE SUMMARY
4. MARKET INSIGHTS AND DYNAMICS
4.1 Market Overview
4.2 Market Drivers
4.2.1 Growing Urbanization
4.2.2 Low-Interest Rates
4.3 Market Restraints
4.3.1 Loan Eligibility Criteria
4.4 Industry Attractiveness - Porter's Five Forces Analysis
4.4.1 Bargaining Power of Suppliers
4.4.2 Bargaining Power of Buyers
4.4.3 Threat of New Entrants
4.4.4 Threat of Substitutes
4.4.5 Intensity of Competitive Rivalry
4.5 Insights on Current Trends and Innovations in the Market
4.6 Insights on Government Regulations Shaping the Loan Market in India
4.7 Impact of COVID-19 on the Market
5. MARKET SEGMENTATION
5.1 By Customer Type
5.1.1 Salaried
5.1.2 Self-Employed
5.2 By Source
5.2.1 Bank
5.2.2 Housing Finance Companies (HFC's)
5.3 By Interest Rate
5.3.1 Fixed Rate
5.3.2 Floating Rate
5.4 By Tenure
5.4.1 Upto 5 Years
5.4.2 6 - 10 Years
5.4.3 11 - 24 Years
5.4.4 25 - 30 Years
6. COMPETITIVE LANDSCAPE
6.1 Market Concentration Overview
6.2 Company Profiles
6.2.1 HDFC Housing Finance
6.2.2 LIC Housing Finance Limited
6.2.3 Indiabulls Housing Finance Limited
6.2.4 L&T Housing Finance Limited
6.2.5 PNB Housing Finance Limited
6.2.6 IIFL Housing Finance Limited
6.2.7 GIC Housing Finance Limited
6.2.8 Sundaram Home Finance
6.2.9 Tata Capital Housing Finance Limited
6.2.10 Aavas Financiers Limited*
- *List Not Exhaustive
7. MARKET OPPORTUNITIES AND FUTURE TRENDS
8. DISCLAIMER AND ABOUT US
India Home Loan Industry Segmentation
The home loan market is the financial sector where lenders provide loans to purchase or construct residential properties. It involves borrowing and lending funds to individuals or households seeking financial assistance to buy a house, apartment, or land for residential purposes. India's Home Loan Market is segmented By Customer Type (Salaried, Self-Employed), By Source (Bank and Housing Finance Companies), By Interest Rate (Fixed Rate and Floating Rate), and By Tenure (up to 5 Years, 6 - 10 Years, 11 - 24 Years, and 25 - 30 Years). The report offers market size and forecasts in value (USD) for all the above segments.
| By Customer Type | |
| Salaried | |
| Self-Employed |
| By Source | |
| Bank | |
| Housing Finance Companies (HFC's) |
| By Interest Rate | |
| Fixed Rate | |
| Floating Rate |
| By Tenure | |
| Upto 5 Years | |
| 6 - 10 Years | |
| 11 - 24 Years | |
| 25 - 30 Years |
Frequently Asked Questions
What is the current India Home Loan Market size?
The India Home Loan Market is projected to register a CAGR of 22.5% during the forecast period (2024-2029)
Who are the key players in India Home Loan Market ?
HDFC Housing Finance, LIC Housing Finance Limited, Indiabulls Housing Finance Limited, L&T Housing Finance Limited and PNB Housing Finance Limited are the major companies operating in the India Home Loan Market .
What years does this India Home Loan Market cover?
The report covers the India Home Loan Market historical market size for years: 2020, 2021, 2022 and 2023. The report also forecasts the India Home Loan Market size for years: 2024, 2025, 2026, 2027, 2028 and 2029.
Which customer segment dominates the India Home Loan Market?
The salaried customer segment dominates the India Home Loan Market.
India Home Loan Market Industry Report
The India home loan market is projected to experience robust growth due to factors such as increasing urbanization, government support for affordable housing, and appealing mortgage rates, contributing significantly to the overall market growth in India. The market dominantly caters to the salaried class and is segmented by customer type. The Main sources of home loans are banks and housing finance companies, with banks leading due to competitive interest rates provided under the marginal cost of funds-based lending rate model. Interest rates are categorized into fixed and floating rates, with the latter preferred for its flexibility. Loans are also differentiated by tenure, with mid-range tenures being the most popular. Property size varies widely, impacting the home loan market size in India. Sales executives are pivotal in the home loan purchasing process, holding a substantial market share in initiating and finalizing deals. Geographically, the market spans across various regions, expecting notable growth in specific areas. Competitive strategies among players focus on flexible interest rates, service charges, and tenure to allure customers, further stimulating market growth. For detailed insights, including market share, size, and revenue growth rates, refer to the industry analysis and market forecast outlook provided in the free report PDF download from Mordor Intelligence™ Industry Reports.
