Financial Daily from THE HINDU group of publications
Wednesday, Nov 24, 2004
Financial Daily from THE HINDU group of publications Wednesday, Nov 24, 2004 |
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Money & Banking
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Interest Rates Rising rates not to hit mortgage portfolios: Crisil Our Bureau
Mumbai , Nov. 23 RISING lending rates will not have more than a marginal impact on mortgage delinquencies , according to Crisil. Although a few small players have reported a significant deterioration in delinquencies, asset quality of housing portfolios is at acceptable levels for the bulk of the industry. Even a sustained lending rate rise will impact delinquency levels only marginally for mortgage lenders on an industry wide basis, Crisil has said. According to the credit rating agency, in the medium term, it will only be players with low cost of funds and effective internal systems who will continue to grow and thrive while others will see their roles being redefined. "In the recent past, intensifying competition put pressure on the profitability margins of industry players pushing down their yields to unsustainable levels", said a press release, quoting Mr Ritesh Maheshwari, Head Financial Sector Ratings, Crisil. The rising interest rate scenario will now increase funding costs for the players, further exacerbating the situation, according to Crisil. Contrary to popular belief, as per Crisil's analysis of mortgage portfolios covering 90 per cent of the outstanding housing loans across 22 entities, inherent asset quality on a system basis continues to be at acceptable levels. While there will be an increase in the reported non-performing assets (NPAs) of housing finance institutions for 2004-05 on account of the change in NPA recognition norms applicable to them from the current financial year, this will not impact Crisil's analysis of inherent the asset quality of these players.
More Stories on : Interest Rates | Real Estate & Construction
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