Mortgage finance assets under management (AUM) of non-bank lenders are expected to grow 18–19% this financial year and the next, broadly matching last year’s 18.5% expansion, even as competition from banks and a likely moderation in real estate sales pose challenges, according to a report by Crisil Ratings.
Mortgage finance includes home loans, loans against property, lease rental discounting and developer finance.
What did Subha Sri Narayanan said?
“Public sector banks have upped the ante and surpassed prime-focused housing finance companies (HFCs) last fiscal and in the first half of this fiscal,” Subha Sri Narayanan, director, Crisil Ratings, said. “The share of sub-9% interest rate home loans in banks’ portfolios surged to over 60% as on March 31, from about 45% last year, triggering increased balance transfers from large HFCs.”
The second challenge stems from expectations of slower residential real estate sales in value terms in the top seven cities, which could affect disbursements for new home purchases. However, non-banks are partly insulated as nearly half of their home loan disbursements are for self-construction or resale properties, where demand remains firm. The share is even higher for affordable housing financiers, the report said.
Notes on affordability
Despite the competitive pressures, long-term structural drivers for home loans – low mortgage penetration, rising urbanisation and improving affordability – remain intact.
Affordability is expected to get a further lift from income-tax cuts, the GST rate reduction on building materials and under-construction homes, and continued policy support through the interest subsidy scheme, the report said.