Nomura estimates that home loan size will more than double in five years

Mumbai: The size of the home loan market in India is expected to more than double from current levels in the next five years. Mortgages are projected to grow at a rate of fifteen per cent over the next decade.

Brokerage firm Nomura said favourable demographics, rising income levels, housing shortage and government schemes to provide affordable homes are indicating an increase in demand for home loans.

“According to our estimates, the home loan industry is expected to grow at a rate of 14 to 15 per cent over the next decade, more than doubling the market size in five years,” the Nomura report said.

Over the past decade, the outstanding number of individual housing loans has seen a compounded growth of 15 per cent. The number of outstanding housing loans stood at Rs 30 lakh crore at the end of September 2023.

Despite this healthy growth, the expansion of housing loans in India remains weak. In FY23, the size of housing loans was 10.60 per cent of the country's total GDP. Whereas in other countries this level is 20 to 65 per cent.

The combined share of public sector banks in outstanding personal home loans stood at 41 per cent at the end of September 2023, while private banks accounted for 38 per cent and housing finance companies at 18 per cent.

Banks' home loan volumes have witnessed a compounded growth rate of 7 per cent in rural and semi-urban areas over the period FY14 to 2024, while the figure stood at 11 per cent in urban areas.