Home loan growth to moderate after demonetisation
Growth in home loans is likely to moderate to 16-18% this financial year from earlier expected level of 18-20% as home buyers and investors defer their purchase decisions on expectations of decline in prices after demonetisation, according to rating agency ICRA. “While growth in the prime home loan segment could witness moderation, affordable housing segment is likely to grow at a faster pace than industry with efforts being made to address the supply, demand and affordability issues," said Rohit Inamdar, group head financial sector ratings, ICRA. Demand from the self-employed segment is also likely to be subdued as their business volumes may have been impacted, and the extent of bounce back in the borrowers’ businesses would be the key determinant for the near to medium term demand from the self-employed segment, said the report. "Given the expected correction in property prices liquidity of properties may get hampered, impacting the loss given default. Despite rising portfolio vulnerability owing to increasing share of non housing loans, higher share of self-employed and low-income borrowers within housing loan segment and high competitive intensity leading to dilution in lending norms (like relaxation of LTVs/FOIRs), we expect gross NPAs for HFCs to remain range over the medium term," Inamdar said. Incremental funding costs for HFCs have come down considerably in the second half of FY2017 with many HFCs raising funds at median rates of 7.5-8%.
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