Aarti Rathod, 28, is thrilled to bits about moving into her own house—a 525 sq ft pad in Goregaon, a Mumbai suburb. But before going house-hunting, Rathod, who works for an NGO, first tied up the financing. Last December, on the strength of her personal credit-worthiness, she got a pre-approval from ICICI Bank for a home loan of Rs 10 lakh. In February, she booked her house. By the end of the month, she expects ICICI to disburse the loan to her, and move in.
Rathod's experience illustrates the recent evolution in the retail lending market, especially the home loans segment. That one can buy a house on credit within a mere three months. That one can get a loan approved on the basis of one's financial profile, even get an actual loan disbursal, with having an asset to show for it. That making big-ticket purchases on credit is no longer a distant, difficult or unaffordable dream for middle-class Indians.
In the past three years, interest rates have dropped on every loan category, the most pronounced being the housing finance segment. Average...