Come rain or shine, housing loans will always have demand: LIC HFL chief

LIC Housing Finance Ltd (LICHFL) is planning to hike the minimum interest rate at which it offers home loans by up to 50 basis points, even as its chief emphasises that a hike in rates will not dampen the loan demand.

Come rain or shine, housing loans are one product which will always be in demand, according to Y Viswanatha Gowd, Managing Director and Chief Executive Officer, LICHFL.

India’s second-largest standalone home finance company is currently offering home loans starting at 6.90 per cent.

“The repo rate has gone up by 90 basis points. But our rate hike will not be more than 50 basis points. This will be in line with the industry trend,” Gowd said in an interaction with BusinessLine. 

Usually, lending rate revisions by LICHFL kick in at the beginning of every quarter. So, the revised home loan rates could be effective from July 1.

Extended tenure

“The cost of properties is more or less stable. Only interest rates will slightly move up... In the last couple of years, when the interest rates were low, the EMI (equated monthly instalment) was not very heavy.

“Now, when the rates increase by 50 or 60 bps, it won’t have much impact on monthly EMIs. But people can opt for a slightly longer term, if required, so that the EMI levels can be maintained, “Gowd said.

LIC HFL expects its total outstanding portfolio to grow by 10-15 per cent year-on-year (yoy) in FY23.

As at March-end 2022, the HFC’s total outstanding portfolio stood at ₹2,51,120 crore (up 13 per cent yoy), with individual loans accounting for 81 per cent (of the total outstanding portfolio); developer loans (about 5 per cent); and non-core loans (about 14 per cent).

To make inroads into Smart Cities

Referring to the HFC entering its 33rd year of operations, Gowd noted: “We are taking many initiatives from the customer products, network, and resources point of view.

“So, we chalked out a strategy for the whole year. We have no doubt about growth this year. Our tagline is Lead@33.”

The HFC will add about 3,000 agents in FY23, taking the total to 13,000, to bring in more business.

Considering the potential business in 100 smart cities, LICHFL plans to open branches in these cities, identified by the government, Gowd said.

Turnaround in project finance

The LICHFL chief observed that there are some non-performing assets (NPAs) in the project finance loan book due to the pandemic. But they are also slowly becoming regularised.

“We will have a very good growth in project finance in FY23. We have good modules in place to undertake project finance in a big way this year. This portfolio could go up to 10 per cent in FY23.

“So, that will be a good addition to the overall portfolio. And in the existing book also, there is a slow turnaround in those project loans that were not doing well. They are getting regularised,” Gowd said.

The HFC’s Stage 3 Exposure at Default as of March 31, 2022, stood at 4.64 per cent against 4.12 per cent as of March 31, 2021.

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