Loans to real estate developers see an 81% increase on improvement in housing sales

real estate developers

With housing sales picking up on the back of record-low home loan rates and stamp duty cuts in many states, several developers have considered refinancing their existing loans. Banks too have come forward to lend on account of increased cashflows for some developers.

A total of 506 loans worth Rs 1.16 lakh crore have been sanctioned during 2020.

There was a 81 percent year-on-year increase in the number of loans sanctioned to real estate developers during the December quarter of 2020, and an almost 180 percent growth in the sanctioned loan amount at Rs 37,921 crore, showed data shared by Propstack.

With housing sales picking up on the back of record-low home loan rates and stamp duty cuts in many states, several developers have considered refinancing their existing loans. Banks too have come forward to lend on account of increased cashflows for some developers, the real estate data analytics firm said.

After a sharp drop in 2019, there was a further 8.5 percent year-on-year drop in the loan amount sanctioned in 2020 versus 2019. If 641 loans were sanctioned in 2019, only 506 loans were sanctioned in 2020 a year that was marked by the COVID-19 pandemic, the analysis showed.

A total of 506 loans worth Rs 1.16 lakh crore have been sanctioned during the year 2020 and this is 8.5 percent lower than Rs 1.27 lakh crore loans sanctioned in 2019, the analysis showed.

There was a strong recovery in the fourth quarter of 2020 with a 81 percent year-on-year increase in the number of sanctions despite an overall 21 percent drop in 2020 versus 2019.

There has also been an 1.8 times year-on-year growth in the loan amount sanctioned in the fourth quarter of 2020 driven by sales recovery and refinancing at lower rates. If loans worth Rs 13,569 crore were sanctioned in 2019, loans worth Rs 37,921 crore were sanctioned in the fourth quarter of 2020, it said.

There was an overall decline of 80 bps in interest rates in 2020 compared to 2019. Interest rates, charged by financial institutions, came down to 10.8 percent in 2020 from 11.6 percent in 2019, following repo rate cuts announced by the Reserve Bank of India, the Propstack analysis said.

The average interest rate charged by the non-banking financial companies (NBFCs) decreased from 13.8 percent in 2019 to 11.9 percent in 2020. Banks saw a decline from 10.3 percent in 2019 to 9.9 percent in 2020, the analysis said.

Propstack covered loan sanctions to over 1,000 real estate developers spread across the country and their SPVs based on their charge filings with the MCA.

Source: https://www.moneycontrol.com/news/business/real-estate/loans-to-real-estate-developers-see-an-81-increase-on-improvement-in-housing-sales-6626161.html

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