HDFC Chairman Deepak Parekh has said India Should be able to double its home loan to about $600 billion within the next five years. Currently, the home loan market in India is estimated at a little over $300 billion, which represents a mortgage-to-GDP ratio of only 11 per cent, he said.
“India should be able to double its home loan to about US$600 billion within the next five years. This will coincide with the period when India will achieve its much-awaited goal of being a $5 trillion economy. Despite housing loans doubling, India’s mortgage penetration will still remain low at an estimated 13 per cent of GDP. Now is the time to ask ourselves what will it take for India’s mortgage-to-GDP ratio to cross 20 per cent and above? Parekh said in a letter to the shareholders.
He said that when one looks at comparable Asian economies, the average mortgage-to-GDP ratio is between 20 percent and 30 percent. This implies that housing loans in India will have an exponential growth trajectory for the coming decades.
“The aspiration to own a home in India will only grow further. The home loan market in India is estimated at a little over US$300 billion, which represents a mortgage to GDP ratio of only 11 per cent. Income Favorable conditions like rising levels of housing, better affordability and financial support augurs well for the demand for homes. Real estate in India is on an upcycle. Developers are now financially stronger and more disciplined,” according to the letter.
Parekh said that digitization tools and expertise are available to provide in-principle home loan approval within two minutes. In equal measure, many still seek counseling and assistance in their home buying journey. No customer story is the same. Still, all home buyers are alike as a home is probably the biggest investment a person can make in their lifetime.
India on the cusp of economic transformation: Parekh
“Over the past two years, I have been on record saying many times that I have never been as optimistic about home loan demand as I am at present. Despite the recent adversities in the global macro landscape, I continue to maintain this stance. India is on the verge of economic transformation.”
The HDFC Chairman also said that as an axis of global growth change, India is envisioned to be among the fastest growing major economies. Most of India’s growth will continue to be driven by domestic consumption.
Through the letter, he also called for the patience of shareholders as HDFC navigates through the complexities of merger with HDFC Bank. “At this juncture, we await regulatory guidance on the way forward. We respect all our regulators and are confident that the results at the system level will be prudent and fair. My only request to our stakeholders is for your patience as we navigate through the complexities of this transaction. More than ever, we need your trust and support.”
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