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Home loan market to double to $600 billion in 5 years: Deepak Parekh

HDFC chairman Deepak Parekh has said that India should be able to double its home loans to around $600 billion (around Rs 46.63 lakh crore) in the next five years.

“It would coincide with the period when India would achieve its long-aspired goal of being a $5 trillion economy,” he added.

The mortgage market in India is estimated at just over $300 billion, representing a mortgage-to-GDP ratio of just 11%. “Favorable conditions such as rising income levels, improved affordability and tax support bode well for housing demand. Real estate in India is booming. Developers are now financially stronger and more disciplined,” he said in his letter to HDFC shareholders.

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Despite the doubling of housing loans, mortgage penetration in India would remain low at around 13% of GDP. “Now is the time to ask ourselves, what will it take to get India’s mortgage-to-GDP ratio above 20% and beyond?” He asked.

“When you look at comparable Asian economies, the average mortgage-to-GDP ratios vary between 20 and 30 percent. This implies that housing loans in India will have an exponential growth trajectory for decades to come,” Parekh said. “The aspiration to own a home in India will only grow.”

Housing finance products are largely standardized. “The main differentiator between home loan providers is emotional quotient – ​​empathy and understanding of customer needs and feelings,” he said.

“We remain committed to providing inclusive and personalized housing finance solutions across all income segments, increasing women’s home ownership, encouraging green housing, and expanding our reach in deep geographies,” Parekh said.

“Over the past two years, I’ve said many times that I’ve never been more optimistic about demand for home loans than I am now,” he said.

“Despite the recent headwinds in the global macro landscape, I continue to maintain this position. India is on the cusp of economic transformation. As the fulcrum of global growth shifts, India is likely to remain among fastest growing major economies,” he said.

Much of India’s growth will continue to be fueled by domestic consumption, he said.

“At HDFC, we know this is the right time to make strategic choices as we prioritize future growth paths. Our moment of truth is that the optimal path to develop housing finance must be housed within a banking structure,” he said.

“The pool of resources for loans will be significantly larger and at lower cost. From a regulatory perspective, it is prudent for all major housing finance providers to operate on a level playing field, with the same rules. Also globally, the scale of mortgage assets is exponentially greater in banks than in non-bank financial entities,” he said.

“We have already explained at length the rationale for the proposed merger, which takes into account the country’s future growth potential, the changing macro environment and changes in the regulatory architecture,” he said.

On HDFC’s merger with HDFC Bank, Parekh said, “At this stage, we are awaiting regulatory guidance on the way forward. We remain respectful of all our regulators and are confident that the outcome will be sound and systemically fair. »

“My only request to our stakeholders is your patience as we navigate the complexities of this transaction. More than ever, we need your trust and support,” he said.

“Trust is the basis of a successful merger. Fortunately, between HDFC and HDFC Bank, there is a natural affinity. Financial and human capital are essential in a merger process, as is a lucid communication strategy on key developments during this period,” Parekh said.

“We always strive to be available and accessible to all of our stakeholders to address concerns in an open and transparent manner. Additionally, both entities are strongly committed to improving environmental, social and governance (ESG) reporting,” he said.


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