India on Cusp of Economic Transformation, Home Loan Market To Double In 5 Years: HDFC Chairman

HDFC Chairman Deepak Parekh has said India should be able to double its home loans to around $600 billion within the next five years. He added that currently, the home loan market in India is estimated at slightly over $300 billion, which represents a mortgage-to-GDP ratio of only 11 per cent.

“India should be able to double its home loans to around US$ 600 billion within the next five years. This would coincide with the period when India attains its much-aspired goal of being a $5 trillion economy. Despite the doubling of housing loans, India’s mortgage penetration would 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 beyond?” Parekh said in a letter to shareholders.

He added that when one looks at comparable Asian economies, the average mortgage-to-GDP ratios range between 20 per cent to 30 per cent. This implies that housing loans in India will have an exponential growth trajectory for decades to come.

“The aspiration to own a home in India will only grow further. The home loan market in India is estimated at slightly over US$ 300 billion, which represents a mortgage to GDP ratio of just 11 per cent. Favourable conditions like rising income levels, improved affordability and fiscal support augur 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 digitalisation tools and expertise are available to provide an in-principle home loan approval within two minutes. In equal measure, many still want counselling and handholding in their home buying journey. No customer’s story is alike. Yet, all homebuyers are alike as a home is probably the single largest investment a person makes in his or her lifetime.

India On Cusp of Economic Transformation: Parekh

“Over the past two years, I have been on record several times stating that I have never been as optimistic about the demand for home loans as I am currently. Despite the recent headwinds in the global macro landscape, I continue to maintain this stance. India is on the cusp of an economic transformation,” he added.

The HDFC chairman also said as the pivot of global growth shifts, India is envisaged to remain amongst the fastest-growing major economies. Much of India’s growth will continue to be powered by domestic consumption.

Through the letter, he also called for shareholders’ patience as HDFC navigates through the complexities of the merger with HDFC Bank. “At this juncture, we are awaiting regulatory guidance on the path forward. We remain respectful of all our regulators and are confident that the outcome will be judicious and fair at a systemic level. My only ask of our stakeholders is for your patience as we navigate through the complexities of this transaction. More than ever before, we need your trust and support.”

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