Housing Loans Crossed ₹33.53 Lakh Crore in Q2FY24, MIG Segment Accounted for 44%: NHB Report

The National Housing Bank (NHB) has reported that individual housing loans outstanding reached ₹33.53 lakh crore by the end of September 2024, reflecting a 14% year-on-year growth. The Middle-Income Group (MIG) segment accounted for 44% of outstanding housing credit, making it the largest recipient of housing finance. The NHB report highlights key trends, government initiatives, challenges, and regional variations in housing credit distribution.

Housing Loan Growth and Distribution

Loan Outstanding by Income Group:

• Middle-Income Group (MIG) - 44%
• Economically Weaker Section (EWS) & Lower-Income Group (LIG) - 39%
• High-Income Group (HIG) - 17%

Loan Disbursements:

• ₹4.10 lakh crore disbursed in the first half of FY24
• ₹9.07 lakh crore disbursed for the full financial year ending March 2024

The increase in housing loans is linked to factors such as urban expansion, rising household incomes, and policy measures aimed at making homeownership more accessible. The demand from the MIG segment has been particularly strong, driven by affordability, increasing loan accessibility, and changing lifestyle preferences.

Government Initiatives Supporting Housing Finance

Several government programs have contributed to the steady expansion of housing credit:

• Pradhan Mantri Awas Yojana (PMAY-U & PMAY-G): Supporting affordable housing in urban and rural areas.
• Urban Infrastructure Development Fund (UIDF): Enhancing urban development to create better housing opportunities.
• Affordable Rental Housing Complexes (ARHC) Scheme: Addressing rental housing needs for lower-income groups.
• Digitization of Land Records: Streamlining property transactions and reducing disputes.

These measures have played a crucial role in broadening housing finance accessibility, particularly for first-time homebuyers. Additionally, the integration of digital tools in lending processes has led to quicker loan approvals and improved transparency.

Regional Disparities in Housing Credit

While housing finance has grown nationwide, there are noticeable differences in credit distribution across regions:

• Southern States: 35.02% of total disbursements
• Western States: 30.14%
• Northern States: 28.73%
• Eastern & Northeastern States: 6.10% (with the Northeast contributing only 0.68%)

The South, West, and North continue to dominate housing finance disbursements, while the East and Northeast lag due to factors such as lower property development, fewer financial institutions, and limited borrower eligibility. Addressing these disparities would require expanded financial inclusion and improved infrastructure in underserved regions.

Role of Housing Finance Companies (HFCs)

Housing Finance Companies (HFCs) have played an essential role in meeting the credit needs of homebuyers. These institutions have become preferred lenders for many borrowers due to their flexible eligibility criteria, quicker loan processing times, and customer-friendly documentation requirements. By catering to a broader customer base, particularly middle and lower-income segments, HFCs have strengthened access to housing finance. Their ability to provide specialized lending solutions, including customized repayment structures, has contributed to the overall growth of the housing market. As demand for home loans rises, HFCs are expected to expand their reach further, adopting digital platforms and innovative financing models to enhance service efficiency.

Challenges Facing the Housing Sector

Despite the steady growth in housing finance, the sector continues to face multiple challenges. Regional disparities in credit distribution remain a significant concern, with the Eastern and Northeastern states seeing lower disbursements compared to other regions. This gap is primarily due to limited financial infrastructure, lower levels of property development, and borrower ineligibility. Additionally, climate-related risks such as floods, cyclones, and other extreme weather conditions are becoming more frequent, emphasizing the need for resilient and energy-efficient housing solutions. However, the high cost of green construction materials and the lack of standardized certification systems make widespread adoption difficult. Addressing these issues will require a combination of policy interventions, financial incentives, and technological advancements to ensure that housing finance remains inclusive and sustainable.

Market Observations on Housing Finance Trends

The NHB report indicates a clear shift in housing loan demand, with the MIG segment emerging as the primary driver of growth. Increasing urbanization and rising incomes have contributed to this trend, along with supportive government policies that facilitate easier access to credit. The steady rise in homeownership aspirations, particularly in urban areas, is shaping the housing finance landscape. With an increasing number of individuals seeking long-term stability through property ownership, financial institutions are witnessing strong demand for housing loans.

Industry trends also suggest that home prices have remained stable, further supporting borrowing activity. The housing finance sector is expected to maintain growth momentum as new infrastructure projects, metro expansions, and smart city developments make more locations viable for residential investment. The shift towards digital lending platforms, AI-driven credit assessments, and automated loan approvals is also expected to improve the accessibility and efficiency of housing finance services.

Future Outlook for the Housing Sector

The housing finance sector continues to expand, driven by rising demand from the middle-income group, government initiatives, and digital advancements in lending. While challenges such as regional disparities and climate-related risks persist, ongoing policy support and infrastructure development are expected to sustain growth. As financial institutions enhance accessibility through innovative lending models, and urbanization fuels homeownership aspirations, the sector is well-positioned for long-term stability. Ensuring inclusive and sustainable housing finance will be crucial in shaping India’s real estate landscape in the years ahead.