The housing loan segment has steadily grown faster than overall system credit. Consistent demand has helped market leader HDFC deliver industry leading growth in the home finance segment. In the June quarter, the company’s 15 per cent year-on-year growth in earnings is thanks mainly to a 17 per cent growth (net of loans sold) in retail loans. Earnings growth is, in fact, 21 per cent, if the impact of deferred taxes is excluded. .

Steady demand Given that HDFC’s average size of loans to home buyers is about ₹22 lakh, at a loan to value ratio of 65 per cent, this segment typically consists of first-home buyers in the mid-income group, where demand has remained steady. But growth in the non-retail segment, comprising developer financing, remained muted due to slow offtake in new projects. This segment grew 11 per cent in the June quarter.

HDFC has also maintained stable asset quality with gross non-performing assets at 0.55 per cent of loans in the retail segment, down from 0.61 per cent last year.

Real estate has been one of the few sectors that got big benefits in the Budget. Key proposals such as increasing the interest deduction limit on home loans, opening up funding avenues for developers, and allowing foreign investments will boost sentiment. Even developers who have been finding it difficult to access funds may benefit from the Budget proposals. The upshot: HDFC, as the market leader in the segment, is likely to get a big fillip.