KOLKATA: 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.
“About 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,” the Reserve Bank of India (RBI) said in its Financial Stability Report released on Monday.
Housing Development Finance Corporation (HDFC) is the country's largest housing finance company. Analysts estimate that HDFC will have around 25 per cent share in the retail home loan market.
HDFC's home loan growth has been higher than the rate at which banks have been increasing their housing finance portfolio in the last few years. Consider this: The growth in housing finance portfolio of banks in 2010-11, 2011-12 and 2012-13 was estimated at 15 per cent, 12.3 per cent and 14 per cent respectively. During these periods, HDFC grew its home loan portfolio by 27 per cent, 27 per cent and 31 per cent.
Industry analysts claim the top five housing finance companies account for the bulk of the retail home loans offered by mortgage lenders. “The top four or five companies will have close to 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,” an analyst with a domestic brokerage said.
The other prominent housing finance companies include LIC Housing Finance, Dewan Housing Finance Corporation and Indiabulls Housing Finance.
Analysts also point out that many non-banking finance companies (NBFCs) 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,” said an analyst.
Separately, 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.