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State Bank of India expects to double its home loan portfolio in the next five years to 10 trillion, riding an uptick in economic activity and an aspirational young population.

Chairman Dinesh Khara said on Wednesday that SBI dominates the home loan market in India with a 35% share among all commercial banks. The bank’s home loan portfolio crossed 5 trillion recently from 4.84 trillion on 31 December, which constituted 23% of its loan book.

“When it comes to home loan demand, it is a function of the economy and demographics. You would have observed there is a definite change in the demographic and the younger generation is looking to acquire homes at a much early age as compared to what it was 10 years back," he said.

Khara said 42% of the bank’s home loan customers were 40 years or younger, and as they start earning even more, their aspirational lifestyle and growing trend of nuclear families will lead to greater demand for homes. Prevalent low interest rates have also prompted people to switch from one lender to another, and SBI benefited from this sensitivity to interest rates, he said. SBI’s home loans start at 6.8%.

“Metro locations are normally very sensitive to interest rates and we have been successful in having about 23% of 5 trillion on account of takeover (of loans)," said Khara.

Besides, the quality of SBI’s home loan portfolio also added to the optimism. Only 0.67- 0.68% of its home loan portfolio has turned bad and very few customers opted for the RBI’s moratorium scheme that allowed borrowers to get their loan repayment terms altered.

Mortgage loans are one of the safest asset categories for banks not only due to the underlying security, but also because borrowers understand that they may lose their homes as a consequence of not repaying the loan.

“Of about 3.9 million-odd borrowers eligible under the RBI’s restructuring plan, only about 10,000 customers have availed the option, which is aggregating to 2,500 crore," Khara said.

Typically, a key draw for a borrower to avail loans from a private sector bank over state-owned peers has been the slow sanctions and long-winding process. For SBI, the turnaround time is about five days for homes in pre-approved residential projects. “We are trying to move builder tie-ups to the Yono platform (mobile app) where customers can directly start their journeys so that even the five-day time can be brought down and pre-approvals can be given in 5-10 minutes," said C.S. Setty, MD, SBI.

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