Housing loan growth accelerated to 15.5 per cent in the first quarter (April-June) of FY23 against 13 per cent in the preceding quarter (4QFY22), according to Jefferies.

Despite transmission of rate hikes, demand stays strong and asset quality can improve, as per a report by the stock broking and merchant banking firm.

“Our recent interactions with Housing Finance Companies (HFCs)  and India Ratings indicate — a) housing loan demand has improved further in recent months especially in tier 2/3 locations; and b) activity in the affordable housing segment stays strong and asset quality trends are improving. This is despite a rise in home loan rates, input cost inflation (land costs are a small proportion of costs in this segment) and withdrawal of the CLSS (Credit Linked Subsidy Scheme) interest subsidy scheme,’ said Jefferies’ equity analysts Bhaskar Basu and Prakhar Sharma in the report.

Housing loans

Housing loans by banks grew 15 per cent Year-on-Year (YoY) and HFC loans grew 16 per cent as per Jefferies bottom up estimates of HFCs constituting more than 90 per cent of HFC loans.

Housing loans at key affordable HFCs (about 50 per cent of Afforable HFC loans) accelerated to 23 per cent YoY in June quarter (19 per cent in 4QFY22), as per the analysts’ assessment.

Jefferies said transmission of rate hikes has been relatively fast so far owing to faster transmission by banks and healthy demand, though the quantum has diverged across segments.

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