Inquiries for home loans for the three months ending December 2022 were down 1% compared to the year-ago period, while those for personal loans and credit cards grew by 50% and 77%, respectively. , Photo Credit: Ramakrishna ji
Credit information company (CIC) TransUnion CIBIL on Wednesday said home loans, the mainstay of retail lending, saw a decline in demand in the December quarter.
However, there has been a “significant increase” in demand for credit cards and personal loans, which constitute a more stressed unsecured loan portfolio for banks, the company said.
The CIC said that the demand for unsecured loan products is being driven by the adoption of consumption-based credit products.
Inquiries for home loans for the three months ending December 2022 were down 1% compared to the year-ago period, while those for personal loans and credit cards grew by 50% and 77%, respectively.
From a loan origination perspective, home loans saw a decline of 6% in volume and 2% in value in the December quarter against healthy growth in personal loans, credit cards and two-wheeler loans segment.
It may be noted that this period also saw a rise in interest rates, leading to concerns about the impact on home loans which are long term in nature, and any increase in interest rates either in monthly loan service cost increases or extends the loan term.
The CIC said that young consumers now form a major part of loan demand, pointing out that 43 per cent of inquiries in the December quarter were made by people between the ages of 18-30, compared to 40 per cent in the year-ago period. Was. and 36 per cent in the December 2020 quarter.
From a geographic perspective, the share of inquiries from rural and urban areas has increased at the expense of inquiries from metro areas.
In a data point keenly watched by lenders, potential borrowers classified as ‘below prime consumers’ saw a 4 percentage point increase in the December quarter to 40% compared to the same period a year ago.
The home loan approval rate marginally declined to 41%, while both personal loans and credit cards saw a sharp improvement of 21%, the report said.
From an outstanding balance perspective, home loan balances stood at 16% in December 2022, while credit cards grew at 19% and personal loans at 33%.
The credit card segment showed an increase of 0.25% in delinquencies beyond 90 days at 2.31%, while personal loans improved from 0.14% to 1%, and home loans improved from 0.39% to 1.21% Has been observed. ,
“Given the impact of global headwinds, it is important to continue to carefully monitor credit risk, particularly early defaults and leverage ratios,” said Rajesh Kumar, managing director and chief executive officer of CIC.