Home buying made a comeback after months of uncertainty caused by the second wave of the pandemic in 2021. Consumers seized the opportune home buying moment thanks to muted prices and low home loan interest rates. Banks doled out more home loans, almost equivalent to pre-pandemic levels of 2019. All this meant better times for real estate developers who could unlock liquidity from their inventories and sell across the board from pre-launches to ready-to-move flats.
All in all, it was a good year for India’s real estate sector given the circumstances.
This momentum in home buying will move on to the next level in 2022 and give a fillip to the home loan market. Consumers will continue their home buying spree and leverage the record low interest rates. One can expect home loans to be one of the most sought after lending products of 2022.
The RBI has not changed the lending rates for quite some time. It is difficult to predict a change in the coming quarters, but one can expect the low interest rate trend to continue. This has triggered a trend of home buying and simplified budget home purchases across major cities. It is a situation that is letting all stakeholders win together. This is not expected to change anytime soon. If the property price is right, chances are you will get a superb low interest deal to go with it in 2022.
My favourite bet on the home loan market for 2022 is the shift towards digital lending.
It all began with the first full lockdown to curb the spread of COVID in 2020. Banks and policymakers were forced to simplify their lending procedures. From video KYC to virtual application, the home loan journey started to get simplified. The biggest disruptor is never just technology, but a player who seizes an opportunity to leverage changing dynamics.
The entry of fintech startups led to the beginning of simplification of the overall home loan process. The game changes when the marketplace doesn’t just connect the bank with the borrower but also enables the completion of the entire process under one roof: from the selection of best loan options to the online application.
In my view, going this full-stack route is the biggest trend as it democratizes the process for borrowers on one hand (access, best rates, and simplicity of application) and on the other hand, becomes a trusted partner to the banks.
In my view, digital home loan marketplaces will lead to a paradigm shift in the home loan market in 2022. They will alter consumer behaviour, simplify home loans and replicate what fintech has already done in other spaces such as insurance, trading and personal loans.
Last but not the least, a market is always understood through its numbers, which makes pre-pandemic home loan volumes of 2019 a benchmark to chase. I am optimistic 2022 will see new benchmarks getting established and home buying will boost home loans as well. If you are a consumer, watch out for great home and home loan deals in 2022. If you are part of the home selling or banking ecosystem, well, this is indeed the most exciting year to reap the benefits of growth after few challenging quarters for the sector.
--Pramod Kathuria, Co-Founder and CEO of Easiloan. The views expressed in this article are his own.
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