People living in non-metro cities, millennials and women borrowing more: report

The number of borrowers has gone up, with people in non-metro cities borrowing more than those in the metros, according to a report titled Moneymood 2019—How India Will Bank This Year by Bankbazaar. The average loan ticket size in metros is ₹2.55 lakh and in non-metros ₹2.80 lakh. Bankbazaar used the number of visitors on its website in 2018 to draw this data.

“My hypothesis is that in the metros, people have access to both personal loans and credit cards. In non-metro areas, people still are not able to get a credit card very easily, and are restricted to personal loans for their credit requirements, leading to a spike in the average ticket size,” said Adhil Shetty, chief executive officer, Bankbazaar.

Among metros, the highest ticket size in 2018 was from Bengaluru at ₹47.23 lakh; among non-metros, Vapi recorded the highest ticket size at ₹25 lakh. The report predicted that in 2019, more first-time internet users will buy financial products online in non-metros.

Home Loans

The average home loan ticket size with women as primary applicants was ₹27.57 lakh; for men, it was ₹22.97 lakh. “Some states offer lower stamp duty in case of purchase of property by women. That’s why women are typically co-owners in property and co-borrowers in loans. Still, less than 5% of home loans are availed by single women,” said Gaurav Gupta, co-founder and CEO, MyLoanCare.in, an online lending platform.

Shetty said when the woman is the primary applicant, it is usually a double-income household. So the average income and, therefore, the average ticket size is higher. “When the man is the primary applicant, a larger proportion of the households are single-income households. Moreover, if the primary applicant is a woman, then you are able to avail better interest rates,” added Shetty.

In its outlook for 2019, the report said home sales will increase by 16% with a spurt in demand for affordable housing, fuelled by women-friendly home schemes, rise in first-time home buyers under the Pradhan Mantri Aawaz Yojana (PMAY) and the transparency infused into the system by the Real Estate Regulatory Authority (RERA). However, in the premium housing category, the demand for loans is set to be lower.

credit cards

Lifestyle cards: Non-metros, under-25-year-old applicants and women are the front runners when it comes to the demand for lifestyle credit cards. Lifestyle credit cards are designed for spending on entertainment, dining, apparel shopping and other lifestyle-related expenses. According to the report, there has been an annual increase of 64.5% in the number of applicants for lifestyle credit cards from non-metros. There has been a 53.67% spike in demand for such cards from those under the age of 25.

“Lifestyle cards are a big draw among both men and women though the growth rates are higher among women due to lower penetration and as large number of women are entering the workforce. Increased acceptability of cards in non-metros and opening of organised retail and entertainment hubs is driving this trend,” said Gupta.

Fuel cards: The fastest growth rate for women in credit card usage is in the fuel cards segment.

The 89% growth in fuel cards applications by women beats lifestyle cards, which grew at 10.49% and travel cards which grew by 73%.

Travel cards: Indians seem to have mastered the art of using travel credit cards that provide accelerated air miles, travel rewards, insurance and air lounge access. There’s been an annual rise of 309% in the number of application from non-metros for travel credit cards, according to the report. Also, the demand from the under-25 demographic has almost doubled.

“Travel credit cards offer safety in addition to convenience. Lot of customers are unwilling to swipe their debit cards while travelling due to concerns regarding misuse,” said Gupta. “For foreign travel, cards offer the added advantage of multi-currency loading. However, one drawback of travel credit cards is the unfavourable exchange rate that these are typically billed at.”

Whatever be the mode of borrowing, make sure you don’t overstep your budget.