Housing finance companies account for 2/5th of the home loan market

Housing finance companies account for nearly two-fifths of the retail mortgage market in the country. Mortgage lenders’ home loan portfolios have also grown at a faster rate than that of regular commercial banks in recent years.

“About two-fifths of the credit available for commercial housing is accounted for by housing finance companies. Outstanding housing loans from housing finance companies have grown relatively faster than outstanding housing loans from individuals by regular commercial banks and 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 largest housing finance company in the country. Analysts estimate that HDFC will hold around 25% of the retail mortgage market.

HDFC’s home loan growth has outpaced the rate at which banks have increased their housing finance portfolio in recent years. Consider this: growth in banks’ housing finance portfolio in 2010-11, 2011-12 and 2012-13 was estimated at 15%, 12.3% and 14% respectively. During these periods, HDFC increased its mortgage portfolio by 27%, 27% and 31%.

Industry analysts say the top five housing finance companies account for the bulk of retail home loans offered by mortgage lenders. “The top four or five companies hold almost 85-90% of the retail home loans offered by housing finance companies. These companies have grown their portfolios aggressively over the past few years and are often preferred by borrowers because loan processing is relatively faster and easier compared to public sector banks,” said an analyst from a house. national brokerage.

Other prominent housing finance companies include LIC Housing Finance, Dewan Housing Finance Corporation and Indiabulls Housing Finance.

Analysts also point out that many non-bank financial companies (NBFCs) have now started offering home loans. This has led to an increase in the market share of housing finance companies in the retail housing loan sector. “There are now around 45 companies offering real estate financing. Many NBFCs have ventured into this business as it is considered a safe business, in the current uncertain macroeconomic environment. This has led to an increase in market share for housing finance companies to around 40% from 30-33% previously,” one analyst said.

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

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