According to Pushpamitra Das, Founder & Director, JUSTO, disbursements in India exhibited a modest growth of 9.2% in FY 2024 on the back of 18.2% growth in FY 2023. Public Sector Banks (PSBs) maintained a dominant position, holding 43% of the market value and 40% of active loans, while the private sector accounts for 23% of the market value and 34.5% of active loans. Housing Finance Companies (HFCs) contribute 22.5% to the market value and 19.4% to active loans. Foreign institutions represent a minimal 0.2% market value and 0.6% active loans, whereas the Others category has 11.3% market value and 5.5% active loans.
In FY24, there was an increase in the average home loan amount across all lenders. Public Sector Banks (PSBs) reported an 11% year-on-year growth, with the average loan amount rising to ₹28 lakhs. Private Banks recorded a 7% increase, with the average loan amount reaching ₹42 lakhs, according to CRIF High Mark.
The Reserve Bank of India (RBI) maintained the repo rate at 6.5% throughout 2024. In December 2024, the RBI reduced the Cash Reserve Ratio (CRR) by 50 basis points to 4%, a move expected to enhance liquidity and potentially lower home loan interest rates.
The 2024-2025 Union Budget introduced measures aimed at transforming the real estate sector, particularly in affordable housing, taxation, and infrastructure development, which are expected to influence the home loan industry positively. Analysts predict that home loan borrowers may experience relief in 2025, with expected interest rate cuts ranging from 50 to 100 basis points, contingent on economic indicators such as GDP growth and inflation.
In summary, the home loan industry in India during FY 2024-2025 experienced a slowdown in growth, influenced by monetary policies and market dynamics. However, with anticipated interest rate cuts and supportive government initiatives, the sector is poised for a potential rebound in the coming years.
