Ratings agency ICRA believes that housing credit from housing finance companies (HFCs) will continue to grow at an average of 20 per cent for the current fiscal year and pick up pace thereafter.
HFCs will not have to lower their interest rates to attain that growth rate, as demand for housing loans is expected to remain robust over the next few years.
Given that corporate earnings remain muted and uncertainty prevails, banks have turned to retail lending to protect their credit growth. This means in addition to HFCs, banks too, are looking to finance home buyers.
ICRA has estimated that HFCs will require ₹80,000 crore over the next five years to grow at over 20 per cent. Of this, ₹55,000 crore will come from internal accruals while the balance will have to be raised.
As the overall credit for housing increases, the mortgage penetration (total housing loans as a percentage of GDP) will also go up from the current levels of 8 per cent.
“Mortgage penetration could increase to double digit levels by March 2018,” ICRA said in its report.
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