Home Loan Growth Slows to 16%
Overall slowdown in the housing sector and the government’s demonetisation move have impacted the home loan sector, with the growth in credit slowing to 16% in financial year 2016-17, against 19% in the previous year, according to rating agency ICRA.
However, the outstanding home loan increased to Rs 14.4 lakh crore as on March 31, 2017, against Rs 12.4 lakh crore as on March 31, 2016.
Both housing finance companies (HFCs) and banks witnessed a slowdown, however, the decline in the pace of growth of banks was higher – declining from 18% in FY16 to 15% for FY2017.
HFCs operating in the affordable housing space, with a total portfolio of Rs 1.2 lakh crore, continued to grow at a faster pace of 28% in FY17, according to Rohit Inamdar, senior vice president and group head, financial sector ratings, ICRA.
“These HFCs’ growth was supported by an increase in supply of affordable housing projects, the infrastructure status accorded to the sector and the improved borrower affordability supported by lower interest rates and capital subsidy through the credit-linked subsidy scheme,” he said.
ICRA expects affordable housing finance to continue to outpace the industry in the future as well.
The asset quality of HFCs remained comfortable with gross non-performaing assets (NPAs) of 0.84% as on March 31, 2017. Smaller HFCs with a higher share of self-employed customers had reported an increase in gross NPAs in Q3FY2017 with borrower cashflows being impacted by demonetisation; the asset quality however improved in Q42017.
The rating agency expects HFCs’ gross NPAs to remain range bound between 0.9% and 1.3% for FY18.