Home loan inquiries slowing; marked increase in unsecured credit as youth drive demand: CIBIL
The Hindu
The demand for home loans in India fell by 1% in the December quarter of 2022, while personal loans and credit cards saw an increase of 50% and 77%, respectively. The adoption of consumption-led credit products is driving the demand for unsecured lending products. Young consumers, between the ages of 18-30, accounted for 43% of loan inquiries. Potential borrowers classified as “below prime consumers” saw a 4 percentage point increase to 40%. The CIC advises careful monitoring of credit risk amid global headwinds.
Home loans, the mainstay of retail lending, witnessed a dip in demand in the December quarter, credit information company (CIC) Transunion Cibil said on Wednesday.
However, there has been a 'marked increase' in demand for credit cards and personal loans, which constitute the more stressful unsecured loans portfolio for banks, the company said.
The demand for unsecured lending products is being driven by the adoption of consumption-led credit products, the CIC said.
Inquiry volumes for home loans for the three months ended December 2022 were 1% lower than the year-earlier period, while the same for personal loans and credit cards shot up by 50% and 77%, respectively, it added.
From a loan origination perspective, home loans witnessed a 6% dip by volume and 2% by value in the December quarter against a healthy uptick in personal loans, credit cards and two-wheeler loans segment.
It can be noted that the period saw a surge in interest rates, which led to concerns over the impact on home loans that are longer term in nature, and any increase in interest rates pushes up either the monthly loan servicing costs or increases loan tenors.
The CIC said young consumers now account for a major share of the demand for loans, pointing out that 43 per cent of the inquiries were by people between 18-30 years of age in the December quarter compared to 40% in the year-ago period and 36 per cent in the December 2020 quarter.
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