HFCs may post robust growth on affordable housing push

Mumbai: Housing finance companies (HFCs) are expected to register robust growth in the new financial year owing to the government’s thrust on affordable housing, recovery in the real estate market and stabilisation of GST, according to a report by ratings and research firm ICRA.Growth in housing credit picked up to 17 per cent for the 12 months ended December 2017 and stood at Rs 15.9 lakh crore, as against 16 per cent in the year-ago period, the report said.“Housing credit growth is likely to pick up further, supported by the improvement in primary sales, and additional GoI’s thrust on the affordable housing segment, which is likely to expand the market,” said Supreeta Nijjar, vice-president, ICRA.“HFCs and the non-banking finance companies (NBFCs) are likely to benefit from their thrust on the relatively high-growth segments like affordable housing and self-employed customers, and their comparatively superior service levels.”ICRA expects banks’ housing credit growth to pick up to 16-18 per cent and that of the HFCs to be in the 20-23 per cent range, leading to an overall market growth of 18-20 per cent in FY19.The HFCs operating in the affordable housing space reported a total outstanding portfolio of Rs 1.4 lakh crore as on December 31, 2017. Their growth was supported by a gradual increase in activity in the affordable housing segment and the improved borrower affordability supported by lower interest rates and capital subsidy through the credit-linked subsidy scheme, ICRA report noted.While HFCs continued to report stable performance on home loans, with gross NPA ratio of 0.6 per cent as on December 31, 2017, the asset quality of their non-housing loan portfolios deteriorated in the nine months of the current fiscal, from 1.4 per cent as on March 31, 2017 to 2.3 per cent as on December 31, 2017.

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