HOME loans declined 9 per cent by volume and 3 per cent in value terms in the December quarter, a credit information company said on Wednesday. The riskier segments of personal loans and credit cards were the other segments where the volumes were down, as per the report by Transunion Cibil. It can be noted that the Reserve Bank of India (RBI) has been advising lenders to go slow on unsecured loans for the last few quarters fearing a risk build-up and is taking regulatory moves towards this end, but the home loans is considered an important segment both for the economy because of the trickle down impact that property buying can have and also for banks from a credit growth perspective. The report said the growth in outstanding balances slowed down to 13 per cent in the home loan segment, as against 15 per cent in the year-ago period.

 

The slowdown in balance growth was despite a 0.16 per cent improvement in the home loans unpaid for over 90 days to 0.8 per cent at the end of December, the report said. The report also said credit demand for the October-December 2024 period witnessed the slowest growth in two years, primarily due to slower demand from new to credit (NTC) and prime consumers. From a geographical perspective, the credit inquiries slowed in the metro areas, while semi-urban and rural areas showed an uptick, it said. Share of total loan originations by NTC consumers decreased to 17 per cent from 21 per cent in December 2023. The decline in the share of NTC consumers in loan originations is consistent across key product segments, the report said. As per the report, 41 per cent of NTC borrowers are Gen Z or those born after 1995, and for 40 per cent of the NTC, consumption-led products like credit cards, personal loans and consumer durable loans were the maiden foray into formal credit.

 

“The acquisition strategies adopted by lenders in response to risk-adjusted returns for unsecured lending products have disproportionately affected the NTC segment, which represents first-time borrowers,” Bhavesh Jain, MD and Chief Executive of the company, said. The continued moderation in credit supply over the last four consecutive quarters led to growth in credit-active consumers slowing down to 9 per cent in December 24 from 16 per cent in the year-ago period, the CIC added.