Home loan ticket size up to over Rs 26 lakh in 2020 on incentives, non-metro demand growth: Report | Economic Times

New Delhi: The average home loan ticket size increased to over Rs 26 lakh in 2020 despite the pandemic as Pradhan Mantri Awas Yojana (PMAY), fall in interest rates as well as lower registration costs in some circles evinced customers' interest in buying properties, according to a study by BankBazaar.com. Due to the pandemic, people's priorities have changed and they are evaluating their spends and investments very closely, the fintech player said in its third edition of 'BankBazaar Moneymood 2021' report. The online marketplace for financial products, which also provides free credit scores, said even as 2020 had very lean months during the lockdown, gradual economic revival and safe access to credit through digital KYC (Know Your Customer) pushed credit uptake to about 80 per cent of pre-COVID levels. Change in social and work structure due to the pandemic also convinced investors to look at bigger properties and loans. "Consequently, the average home loans ticket size saw a strong increase from Rs 23.82 lakh in 2019 to Rs 26.41 lakh in 2020. The average ticket size for women went up from Rs 25.66 lakh to Rs 31.20 lakh compared with an increase from Rs 23.64 lakh to Rs 26.04 lakh for men," the report said. However, the traction was the lowest in high-value segment. Share of home loans below Rs 30 lakh decreased to 68 per cent from 72 per cent a year ago. Demand from non-metros is the biggest driver for recovery, it said. During the year, the biggest home loan of Rs 1.46 crore was from Bengaluru, while among non-metros, the highest was Rs 64.50 lakh from Lucknow. Going forward in 2021, home loans will continue to be a buyer's market, it added. "Continuance of PMAY benefits, choice inventory, slashed registration costs in some places, and record low interest rates on home loans work in favour of those who can afford to buy a home for self-occupation. The reverse migration especially among the older millennials and Gen-Xers to their hometowns thanks to remote working policies could have a very interesting impact," as per the report. Generally, birth years from 1965 to 1980 are used to define people from Generation X, while birth years 1981 to 1996 are used for millennials. In personal loan category, 2020 was a tough year for unsecured lending. Pandemic, increasing bad loans and heightened lending risks due to lengthy moratorium on loan repayments contributed to slowing access to personal loans as the average ticket size fell on year, the report said. However, non-metros continued to take bigger personal loans at an average of Rs 2.06 lakh as compared to Rs 1.84 lakh in metros. BankBazaar.com said personal loans should bounce back strongly April onwards. "The melting away of uncertainties would improve economic sentiment and boost incomes, which would encourage unsecured lending. Per some estimates, personal loans should bounce back strongly in the April quarter," it added. In credit card segment, non-metros remained ahead of metros with their contribution growing by over 20 per cent. There was 115 per cent rise in applications for premium credit cards and 240 per cent jump in applications by females in non-metros, showed the study. "Habits once formed during the pandemic are likely to last. Credit card users have gotten used to accelerated rewards and cashback through online shopping. This will likely continue," the report said. With contactless loan disbursal gaining grounds, the study revealed that non-metros contributed 33.6 per cent of such loans. Region-wise, south India had largest share at 40 per cent in terms of contactless disbursal. The sudden and drastic disruption of services in the banking, financial services and insurance (BFSI) sector during the lockdown has been a wake up call for the regulators as well as the ecosystem. The customer demand for such products, coupled with the need to protect against any future disruptions, is driving regulators to consider ways to enable secure contactless access to personal finance products, it said. The coming year could be a game changer, BankBazaar.com said. "The world faced an unprecedented crisis this year and this was compounded by massive business continuity issues faced globally. Data shows that despite the odds, India is on the way to recovery as economic activity gets back on track. During these tough times, technology provided the solution to some very challenging problems," BankBazaar CEO Adhil Shetty said.