The Centre’s various initiatives for the affordable housing segment appears to be paying off if the dip in average ticket loan size of HDFC — the market leader in the housing finance segment — is any indication.

After steadily rising over the past six to seven years, by 5-6 per cent annually, the company’s average loan size has fallen by a notable 10 per cent over the June quarter and by around 6 per cent over last year.

The average loan ticket size for HDFC stood at ₹23.6 lakh in the September quarter, down from ₹26.3 lakh in the June quarter and ₹25.6 lakh in the March quarter.

In March 2011, HDFC’s average loan ticket size stood at ₹18.6 lakh. This has been inching up over the past several years. The dip in the September quarter is the first in many years.

What gives?

This could indicate two things. One, there has been a slight correction in property prices. Two, the Centre’s various initiatives for the affordable housing segment, such as ‘Housing for All by 2022’ and the interest subvention scheme, appear to be taking off. For the middle-income category, in particular, the Centre’s credit-linked interest subsidy scheme has brought good tidings. The scheme, effective from January 1, 2017, offers an upfront interest subsidy of up to ₹2.3-2.35 lakh to eligible borrowers availing themselves of loans to buy ready-to-use or under-construction property.

Lenders have also been going all out to offer best deals for the affordable segment (up to ₹30 lakh), which are 25-30 basis points (bps) cheaper than the rates offered on loans up to ₹75 lakh.

Loan growth is a function of price and volumes. For HDFC, though, the growth in its retail loans (23-25 per cent over the last three years) has been mainly led by volumes.

After steadily increasing over the last couple of years, it needs to be seen whether the sudden dip in loan size in the September quarter is a sustainable trend.

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