Low home ownership at 32%, future outlook positive for home finance in India: First IMGC – Home Hunt 1.1 research



L2R Amitava Mehra, CEO, IMGC and Sriram Kalyanaraman as Managing Director and CEO of National Housing Bank.
L2R Amitava Mehra, CEO, IMGC and Sriram Kalyanaraman as Managing Director and CEO of National Housing Bank.

·         Top constraints cited by respondents are high interest rates (38%), lack of savings and unwillingness to borrow (38%), high property rates (32%) and insufficient loan availability (32%) indicating urgent need to solve for availability of funds at an earlier stage in life

·         High dependence on personal savings to pay down payment for first time home buyers also delaying home ownership

·         Almost half of Millennials live with parents (46%), than in rented (31%) and self-owned homes reflecting their financial dependence on parents

·         ‘Lack of loan history’ and ‘obtaining requisite loan amount’ a bigger challenge for young borrowers as compared to others


New Delhi, 30 March 2017:  India Mortgage Guarantee Corporation (IMGC) today released the findings of its first-ever Home Hunt 1.1, an annual research survey on trends in housing and perspectives on housing finance in India. The research aimed to provide unique insights into the attitudes, needs and concerns of the Indian home buyer, has been undertaken in conjunction with Kantar IMRB across 14 cities (metros, mini metros and small towns). The IMGC Home Hunt 1.1 research takes into account data from both people who have already bought a home and ones that are planning to buy.

The IMGC Home Hunt 1.1 was released today in Delhi in presence of Mr. Sriram Kalyanaraman, MD & CEO, National Housing Bank and Mr. Amitava Mehra, CEO, India Mortgage Guarantee Corporation.

The key findings of the IMGC Home Hunt 1.1 research reveals that only 32% of the respondents live in self-purchased homes and 56% do not wish to buy a house in the near future. The top four reasons indicated by respondents: A. high interest rates (38%), B. lack of savings and unwillingness to borrow (38%), C. high property rates (32%) and D. insufficient loan availability (32%); draw attention towards the urgent need to solve funding requirement at an earlier stage in life

Mr. Sriram Kalyanaraman, MD & CEO, National Housing Bank said, “The housing sector in India is poised for a higher growth, especially in the affordable housing segment by the Housing for All by 2022 Mission and the Infrastructure status accorded by the Government of India, apart from various others measures. The IMGC Home Hunt 1.1 research report focuses on challenges faced by consumers in terms of accessibility to housing finance, and their preferences for various types of cities and houses. In this context the mortgage guarantee can play a significant role in enhancing the flow of financing to the consumer at an earlier stage so that owning a dream home becomes a reality in early stages of life.”

High level of tenancy and significance reliance on personal savings to pay down payment delaying home ownership

Notably, tenancy is significantly higher in small towns at 37% as compared to 29% in metros and 23% in mini metros. When the age group of 25-44 years is considered (including the millennials), the level of tenancy is at a massive 63%. Hence, the demand for affordable housing can be anticipated amongst the younger age group (25-44 years) more so in small towns, as compared to metros and mini-metros.



This data underscores the fact that although increasingly youth have started earning at an early age and have the ability to pay EMIs of the home loans, their potential to pay the down payment is still limited. This research also identifies a significant trend in India to rely on personal savings (62-65%) for the down payment of homes.



Challenges faced while applying for home loan

The top three challenges faced by home buyers in obtaining a loan has been identified by the research as A. high interest rate (43%), B. lack of loan history (40%) and C. getting the desired loan amount (38%). Moreover, a younger borrower finds ‘lack of loan history’ and ‘obtaining requisite loan amount’ a bigger challenge as compared to other borrowers.















The data from the IMGC Home Hunt 1.1 research also indicates that 2 in 3 respondents view home loans as a way to avail tax benefits which demonstrates an open mind towards borrowing. However, only one in five respondents seek a LTV beyond 70% indicating Indian home buyer’s conservative approach towards debt. While the home budget is comparable across age bands, the research found that the younger segment seeks relatively lower LTV. It may be possible that they face challenges getting a higher loan amount due to lack of credit history as mentioned by them.

Mr. Amitava Mehra, CEO, India Mortgage Guarantee Corporation (IMGC), said, “In the last cou­­ple of years, there have been a number of positive developments to boost home ownership levels in India whether it is through regulation of the real estate sector, providing incentives to the builders, or introduction of schemes such as Housing for All. However, the Indian home buyers still face significant challenges in pursuing their dream home owing to both financial constraints stemming from both personal and external factors. These obstacles such as lack of savings or insufficient loan availability can be managed to a large extent through mortgage guarantee backed loans. With availability of higher Loan To Value (LTV), Indian home buyers can achieve their home buying dream earlier by not relying solely on personal savings.”

It is also important to note, that while 48% of home intenders were looking to buy houses smaller than 500sq. ft., only 42% of buyers actually bought a house smaller than 500 sq. ft. This clearly demonstrates a willingness to stretch finances. Almost two thirds of the total intenders are willing to stretch their budgets. Notably, the stretch index was the maximum in the budget segment of INR 15-30 L and in the highest segment of INR 70 L – 1 Cr.

Interestingly, buying a house as an investment option is still the reason for almost half of the respondents (both intenders and recent buyers). The top reasons for buying a house include ‘long-term security’ (64%) and ‘pride of ownership’ (59%).

Mr Mehra further added, “The self-employed consumers show a comparatively higher intent to buy a house, resulting in a greater need for home loans possibly due to the fact that this group is underserved. The real estate developers as well as the lenders need to create awareness and opportunities to address these concerns of consumers to lift home ownership. All market players need to educate consumers on methods that support their home ownership dream.”



Notes to the editor

IMGC Home Hunt 1.1 is the first annual edition of the India Mortgage Guarantee Corporation (IMGC) report on trends in housing and perspectives on housing finance in India. The report provides unique insights into the attitudes, needs and concerns of the Indian home buyer. This survey was conducted in two phases across metros- Delhi, Mumbai, Bangalore, Chennai, Kolkata; mini metros- Jaipur, Ahmedabad, Pune, Hyderabad; and small towns- Indore, Raipur, Nagpur, Bhubaneshwar, Vishakhapatnam.



The first phase was an estimation of prevalence of home hunt/ home loan, which was a widespread random (random sampling) home to home survey among 2400 decision makers. This was conducted in SEC A and SEC B classifications, of men and women further divided in age groups of 25-34 years, 35-44 years and 45-55 years (salaried and self employed). The Phase 2 of this survey was the determination of needs of Home Buyer/ Borrower conducted among 1750 home/ loan purchasers identified through Area Purposive Sampling. The interviews in both phases were undertaken through Tablet Aided Personal Interviews (TAPI).



Downloadable link of the IMGC Home Hunt 1.1 research survey: http://www.imgc.com/corporate/download-center

Picture attached : Left to right: Mr. Amitava Mehra, CEO, India Mortgage Guarantee Corporation (IMGC), and Mr. Sriram Kalyanaraman, MD & CEO, National Housing Bank



About IMGC

India’s first Mortgage Guarantee Company, India Mortgage Guarantee Corporation (IMGC) is a joint venture that combines the developmental mandate of National Housing Bank (NHB), the technical expertise of Genworth Financial, and the resources of International Finance Corporation (IFC) & Asian Development Bank (ADB). IMGC has come into being with a vision to make early home ownership a real possibility through the provision of Mortgage Guarantee. For more details please visit our website at: www.imgc.com



About Kantar IMRB

Kantar IMRB is a pioneer of market research services in Asia. It partners its clients across the entire brand life-cycle through a unique mix of innovation and analytical thinking to design customized solutions that deliver greatest impact. Kantar IMRB’s suite of solutions is designed on frugal, agile innovation and adds value, real value, to help clients make impactful decisions. By leveraging on its large array of syndicated services and specialist divisions, Kantar IMRB helps clients in crafting marketing and consumer strategies. Kantar IMRB has created products and frameworks for global clients using the expertise and knowledge of emerging markets. With a multi-disciplinary and multi-cultural workforce, Kantar IMRB is at the forefront of research and consulting services.