Growth of Indian Mortgage Industry

The Indian mortgage and housing sector has experienced an impressive growth rates during last 5 to 7 years and a number of factors are responsible for the same. While the builders and developers have found ready buyers even before start of construction, buyers have gained immensely with ever increasing property rates and better returns compared to other sectors of the economy. Housing finance companies are also laughing all the way to their banks with borrowers queuing up to borrow to finance their purchases. The result is that all the players in the field have been benefited by the Indian mortgage growth story. The mortgage rates have risen in recent times from all time low to 6.5% to almost 11.5%, giving some torrid times to those who have borrowed on floating rates of interest. However despite that, the asset bubble which was an apprehension felt never seems to be there at least as of now. 

 Perhaps this is one sector where favorable policies of the successive governments and continuity of the same is one of the biggest factors responsible for the growth. The tax benefits in terms of deduction of interest and principal from taxable income has been instrumental in giving impetus to average middle class salaried person to go for borrowings and finance the purchase his dream home. Housing developers have also enjoyed tax benefits over a period of time. The decision to allow FDI in the reality sector would give more fillip to the sector and allow the best practices and standards of international players in the field. Another factor responsible for the tremendous growth is the easy availability of cement and other raw material for the construction sector, a phenomenon which was not there say around 15 to 290 years back when cement was a rare and highly regulated commodity. With impetus being given to the infrastructure sector and housing being regarded as a priority sector, the industry has never looked back since then. 

 

Today in the regime of higher interest rates and growing concerns of defaults especially by heavy borrowers, there appears to be little correction taking place in the property scenario. However the growth story is different this time compared to the earlier times in one way. Today the growth is actually led by users of the property and not the investors and speculators. Thus even though investors seem to have vanished from the scene the consumption driven demand is still there, putting premium on quality and reputation of well known builders.

Today the housing and mortgage industry in

India is a success story in itself, showing great growth and robustness in the face of growing concerns. While all sectors are open to cyclic trends and patterns and so is the housing. At least this is one sector where there can never be a glut in the long run with limited availability of land and more and more demand for homes and residential apartments especially in big cities and metros. Thus it is always a good idea to go for the dream house you have been thinking of for years. Remember the earlier you take decision, the better for you in terms of saving in rental costs and tax benefits. Even if you can afford to make a full payment, it is advisable to go for a loan to avail of good tax incentives and rebates. Happy Home!!

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