Mumbai: While the total housing credit growth slowed down in FY17, housing finance (HFCs) firms operating in affordable housing segment witnessed a significant increase in loan growth.
According to Icra, the total housing credit growth dropped to 16 per cent in FY17 from 19 per cent in FY16, with the overall housing credit standing at Rs 14.4 lakh crore as on March 31, 2017.
However, 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 per cent in FY17 compared to the industry.
These HFC’s 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.
Traditional lenders that have historically focused on the prime segment have also started lending to this segment. ICRA expects affordable housing finance to continue to outpace the industry, going forward as well.
“While the slowdown was across both HFCs and banks, the decline in the pace of growth of banks was higher – declining from 18 per cent in FY2016 to 15 per cent for FY2017 – largely because they were operationally tied up in the second half of FY17 on account of demonetisation. The growth in the sector was also impacted by a slowdown in new project launches with buyers and investors deferring their home purchase decisions in expectation of a decline in real estate prices,” the rating agency noted.
According to it, HFCs’ asset quality remained comfortable with gross non-performing assets (NPAs) of 0.84 per cent as on March 31, 2017.
Smaller HFCs with a higher share of self-employed customers had reported an increase in gross NPAs in Q3 FY17 with borrower cash flows being impacted by demonetisation, the asset quality however improved in Q4 FY17.
