The debt burden on Indian households is constantly increasing. This also includes the increase in unsecured loans like credit cards and personal loans. But home loans account for half of the total debt. This claim has been made in a report by Care Edge Ratings.
For a long time, reports have been coming out about people’s savings decreasing and their debt increasing. Concerns are also being expressed in these various reports about the increasing loans on homes. Now a report by CareAge has revealed that the reason for the increasing debt on Indian homes is the increase in housing loans.
Home loans account for 50% of total retail loans of Indians
According to CareAge, home loans account for 50 per cent of the total retail loans of Indians. In the financial year 2022-23, home loans in India had increased to 38 per cent of GDP. But it has also come down compared to the peak of 39.2 per cent in 2020-21. But despite this slight decrease, this figure is still higher than other emerging economies. According to the data, household loans in Brazil are equal to 35 per cent of GDP. On the other hand, home loans in South Africa are equal to 34 per cent of GDP.
Loans on Indian homes
The report says that amid heavy debt pressure on Indian households, unsecured loans including credit cards are increasing significantly. Expressing concern over this, it has been said that there is a need to monitor them closely. But home loans are considered to be the main reason for the increase in debt. The report says that this has not affected the total savings of households and it remains equal to 24 percent of GDP. But now the pattern of savings has shifted from bank deposits to physical assets like real estate. This trend also indicates that people are now increasingly wanting to own a home. Investment in this is also considered safe because it gives a return higher than the inflation rate and the risk of a decrease in prices is also negligible.
People are investing in homes and other properties
The report says that people are investing in homes and other properties and this cannot be considered an expenditure. Whereas loans like credit cards or personal loans are increasing the burden of people by becoming a means to fulfill their needs. The report says that the investment of Indian households on real estate benefits the infrastructure which ultimately helps in increasing the economy. In such a situation, this report has expressed non-concern about home loans but has expressed concern over unsecured loans.