Knowledge Centre
Why is the bank's primary focus being on housing loans?
Housing loans are one of the largest and most profitable loan categories for banks. When a bank provides a housing loan, it can earn interest on the loan over a long period of time, typically 15 to 25 years’ duration. This can provide a stable and predictable source of revenue for the bank. Moreover, banks repeatedly require collateral for housing loans, which is usually the property being purchased. This provides the bank with a measure of security in the event that the borrower defaults on the loan.
The housing loans are one of the key drivers of economic growth. It promotes stability and visible economic activities across the nation. When banks provide housing loans, it stimulates the real estate market. This can ignite a ripple effect on other sectors of the economy, such as construction, interior decoration and retail.
The housing loans are always considered as a low-risk investment for banks by the experts. This is because they are secured by the property being purchased, which provides the bank with a level of protection in the event that the borrower defaults on the loan.
Finally, housing loans are a significant method for banks to build long-lasting relationships with their customers. If a customer opts for a housing loan, they are ensuring significant financial commitment that can last for several years. This long-term commitment also pushes the customer to take more banking services like additional loans over the period. Again, that will bring additional revenue to the bank.
So, housing loans are a primary focus for banks for a variety of reasons. They are a profitable loan category which helps to drive economic growth. They are also viewed as a low-risk investment for the banks; and can lead to long-term relationships with customers. While banks offer a range of financial products, their focus on housing loans is likely to continue and grow at a healthy rate for the foreseeable future.
