While home loan demand continues to be strong, the rise in rates at large housing finance companies (HFCs) has had a slight impact on disbursements, according to a Jefferies report.
Disbursements at large HFCs de-grew 3 per cent year-on-year (YoY) in the third quarter. Bank housing loans dipped 0.5 per cent month-on-month (MoM) in January.
“With EMI/ income up by about 15 per cent for larger ticket home loans, home buyers are adjusting down payments to keep EMIs in a reasonable range,” said the investment bank and capital markets firm’s Equity Analysts’ Bhaskar Basu and Prakhar Sharma and Equity Associate Kaushik Agarwal.
They forecast housing loans to grow at 13 per cent CAGR (compounded annual growth rate) over FY23-26 versus 17 per cent YoY in 3QFY23 per their estimate.
Loans at affordable HFCs (AHFCs) grew 27 per cent YoY in 3Q, according to per Jefferies’ estimate.
“As the sector is under penetrated, growth is driven by distribution expansion and increasing penetration rather than rate cycles or market growth.
“Higher rates are not yet a major headwind as home loan rate hikes have been much lower (50-160 bps) at affordable HFCs (AFHCs) versus that at large HFCs. AHFCs continue to gain share in the sub-Rs 15 lakh ticket segment,” the analysts’ said.