Bullish on affordable housing segment: Atul Monga, CEO Basic Home Loan

While the share of affordable homes has seen a decline on account of rising interest rates, Basic Home Loans has decided to buck the trend and will initiate a dedicated lending line specifically for affordable housing. The firm has so far disbursed home loans of around Rs 7,000 crore, of which Rs 4,200 crore were given to the affordable segment.

“This initiative aligns seamlessly with our goal to expand our reach within the priority sector lending (PSL) domain,” said Atul Monga, chief executive of BASIC Home Loan.

As per a recent report by property consultant Anarock Group, affordable home sales declined from 31% in the first half of 2022 to around 20% in the same period in 2023 from the total share of home sales.

Monga of Basic Home Loan, however, feels that the demand in the small-ticket home loan market, particularly in the Rs 25–30 lakh segment, has remained steady, driven by the growing middle-class population and increased urbanization.

“We process loan applications each month, approximately 5,000 crores in value, but only manage to disburse about 1,000 crores from this pool,” he said, noting that this is a significant market segment that remains unserved due to the lack of suitable financial products.

Monga opines that the affordable housing market is expected to grow, driven by continued government support and increasing demand from first-time homebuyers. “Rising interest rates can dampen the small-ticket home loan segment, but government initiatives, like tax benefits and subsidies, have supported this segment,” he said.As per the Anarock report, affordable home buyers have been paying almost 20% more in their EMIs over the last two years, and in the last two years, the floating interest rates for home loans up to Rs 30 lakh have jumped up from 6.7% in mid-2021 to nearly 9.15%.Monga feels that the PM Awas Yojana scheme can be made more inclusive by revising income criteria and streamlining the application process for better accessibility. “Encouraging private sector participation for technological and financial support can also give the scheme a spur,” he said.