HFCs contributes 2/5th of home loans in the overall loan amount

By Accommodation Times News Services

Image for HFC storySince, last few years home loans in Indian financial market has acquired major amount of home loans. The major portion of loan amount in the market is contributed by housing finance sector during last 3-4 years. Housing finance companies account for almost two-fifths of the retail home loan market in the country. The home loan portfolios of mortgage lenders have also grown at a faster pace than that of scheduled commercial banks in the last few years.

In RBI’s recent Financial Stability Report they have mentioned that, around two-fifths of credit available for retail housing is accounted for by housing finance companies. Outstanding loans for housing by housing finance companies have grown relatively faster than outstanding retail housing loans by scheduled commercial banks and have doubled in four years from 2007.

As per expert’s views there are five housing finance companies who rank top in account for the bulk of the retail home loans offered by mortgage lenders. LIC Housing Finance, Dewan Housing Finance Corporation, Indiabulls Housing Finance and HDFC are the top ranking HFCs.

The top four or five companies have contributed around 85-90 per cent share of the retail home loans offered by housing finance companies. These companies have been growing their portfolios aggressively in the last few years and are often preferred by borrowers as loan processing is relatively faster and simpler compared to public sector banks.

The experts also claim that the growing needs of housing and home loans have raised many non-banking finance companies (NBFCs), who have now started offering home loans. It has led to the rise in market share of home finance companies in retail housing loan. There are around 45 companies now that offer housing finance. Many NBFCs have entered this business as it is considered as a safe business, in the current uncertain macroeconomic environment. This has led to the increase in market share of housing finance companies to around 40 per cent from 30-33 per cent earlier.

RBI noted that house prices in some major Indian cities have recorded “extremely high growth” between 2007 and the second quarter of 2013. Home prices even doubled in some of the cities during this period. However, from the second quarter of 2013, house prices have either declined or the rise has been moderated.

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