Growth Prospects Good for Housing Finance Firms

The real edge for home loan lenders, among other non-banking financial companies (NBFCs), has been easy funding. HFCs have kept funding costs from rising for them despite the pandemic. One factor has been that a housing loan is seen as secured lending with loans being

BY Realty Plus
Published - Wednesday, 30 Dec, 2020

Growth Prospects Good for Housing Finance Firms

The real edge for home loan lenders, among other non-banking financial companies (NBFCs), has been easy funding. HFCs have kept funding costs from rising for them despite the pandemic. One factor has been that a housing loan is seen as secured lending with loans being collateralized and safe. Another reason has been RBI’s liquidity measures, which has kept liquidity at a surplus for a long period. Housing finance companies (HFCs) have not had it easy amid the pandemic. Loan disbursements that had halted during the lockdown months took time to recover. Loan growth for most lenders decelerated sharply in the first half of FY21. Analysts said loan growth may likely be in single digits for FY21. Given the weak disbursement outlook, as well as the increased stress on borrowers, HFCs had shifted their complete focus to collections and conserving capital this year. A troubled real estate sector has also not helped. However, all that is now taking a turn for the better, with loan disbursal looking up for most lenders. The pickup in real estate activity on the retail side has cheered HFCs. Home registrations have surged in select cities and home sales in the affordable housing is looking up. This augurs well for HFCs when it comes to disbursements.