Home Loan
The assets under management (AUM) of housing finance companies are expected to grow 10-12 per cent in this financial year 2022-23, as against 8 per cent in the last financial year, mainly due to home loans, which could grow 15 per cent on-year, said CRISIL.
Last fiscal, HFC growth was a story of two halves: stunted to just about 2 per cent (annualised) in the first half because of the second wave of the pandemic, and a V-shaped 14 per cent (annualised) growth in the second half.
"Structural factors driving end-user housing demand remain intact this fiscal despite the impact of rising real estate prices and interest rates. This should drive 13-15 per cent growth in the home loan segment. And despite the recent hikes, interest rates remain below previous cycles and haven't impacted customer interest materially," said Krishnan Sitaraman, Senior Director and Deputy Chief Ratings Officer, CRISIL Ratings.
Despite the growth, housing finance companies are expected to continue losing home-loan market share to banks amid stiff competition.
While access to funding is not a big challenge for most housing financiers, competitive borrowing cost is crucial versus banks, which benefit from low-cost deposit funding.
HFCs have already conceded 400 basis points market-share to banks over the past four fiscals resulting in banks' share rising to 62 per cent as of March 2022.
This trend is unlikely to reverse in the near term. Banks are expected to gain market share further with HDFC Ltd, the largest HFC, set to merge with HDFC Bank next fiscal.
The ability of HFCs to compete with banks in the traditional salaried-home-loan segment remains a challenge given their relatively higher funding costs.
HFCs are expected to increasingly partner with banks and leverage each other's strengths to grow their books. Some HFCs are already moving in this direction. Therefore, asset/on-book growth is likely to be lower compared with AUM growth.
Meanwhile, one segment where HFCs have been growing relatively faster is affordable housing loans, where competition from banks is limited.
Affordable housing financiers (AHFCs), therefore, have seen relatively better growth of 12-15 per cent in the recent past despite moderation from earlier levels. Given their relatively smaller footprint and large underlying demand, AHFCs are expected to keep growing faster than traditional HFCs.
--IANS
msn/dpb
(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)
Business Standard has always strived hard to provide up-to-date information and commentary on developments that are of interest to you and have wider political and economic implications for the country and the world. Your encouragement and constant feedback on how to improve our offering have only made our resolve and commitment to these ideals stronger. Even during these difficult times arising out of Covid-19, we continue to remain committed to keeping you informed and updated with credible news, authoritative views and incisive commentary on topical issues of relevance.
We, however, have a request.
As we battle the economic impact of the pandemic, we need your support even more, so that we can continue to offer you more quality content. Our subscription model has seen an encouraging response from many of you, who have subscribed to our online content. More subscription to our online content can only help us achieve the goals of offering you even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practise the journalism to which we are committed.
Support quality journalism and subscribe to Business Standard.
Digital Editor
First Published: Wed, September 14 2022. 17:19 IST