Home loans business boomed in FY15
Interest rates have been soft and real estate prices have moved up very marginally
May 09, 2015
Source : The Times of India


CHENNAI: A revival in economic sentiment, rising income levels of borrowers and cooling property prices have resulted in mortgage lenders reporting double-digit growth in disbursements. Take HDFC, India's largest mortgage player. The lender has witnessed 16% growth in individual loan disbursements last fiscal, with the average home loan ticket size moving up in the last 12 months to Rs 23.3 lakh compared to Rs 22.1 lakh during 2013-14.
"Interest rates have been soft and real estate prices have moved up very marginally as compared to the level of increase in disposable incomes thereby making house buying more affordable," managing director of HDFC, Renu Sud Karnad, said. There is good traction for properties in the periphery regions of the four metros, she said.
Indiabulls Housing Finance, too, has reported 36% growth in home loan disbursals to Rs 10,065 crore during FY15 as against Rs 7,387 crore during 2013-14. "Growth has been driven by funding houses in the Rs 25-50 lakh (range) where transaction volumes have been very robust over the last year," deputy managing director of Indiabulls Housing, Ashwini Hooda, said.
In fact, the centre's push towards affordable housing is expected to boost overall home loan growth to 20-22% this fiscal, according to a recent report by ICRA. The segment had seen 17% growth in the first nine months of 2014-15 with the housing finance market crossing the Rs 10-lakh-crore mark as of December-end last year.
ICRA's report also states that investor sentiment for the housing sector has improved as reflected by capital infusions of Rs 1,780 crore in various housing finance companies (HFCs) during last fiscal.
DHFL's home loan book grew 27% to Rs 51,040 crore during last fiscal as against Rs 40,451 crore during FY14. The company's average loan size also moved up to Rs 12 lakh from Rs 11 lakh during FY14.
With interest rates south-bound, lenders see strong growth signals ahead. HDFC brought down its lending rate by 20 basis points to 9.9% which was followed by Indiabulls Housing when it, too, lowered rates to 9.9% from 10.10%. Sundaram BNP Paribas Home Finance also reduced its prime lending rates to 9.95%.
"We believe our loan book can grow 15-18% CAGR (compounded annual growth rate) over the next three to five years," HDFC's Karnad said.
According to ICRA, HFCs will need external capital of around Rs 18,000-28,000 crore to grow at 20-22% over the next five years, assuming an internal capital generation of 16% while maintaining the capitalization levels at current levels.

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