INDIA'S
HOUSING FINANCE INDUSTRY..!
India’s
housing finance industry mainly comprises banks and HFCs (housing finance
companies), and to a certain limited extent, smaller institutions such as
community-based organisations, self-help groups, etc.
The
NHB (National Housing Bank) operates as the principal agency for promoting,
regulating and providing financial and other support to HFCs at local and
regional levels, while banks and NBFCs are managed and regulated by the RBI. As
of March , 2013, 56 companies have been granted certificates of registration by
NHB to act as HFCs.
Source:
http://www.nhb.org.in/Regulation/RegisteredCompanies.PHP and
http://www.nhb.org.in/Regulation/NonValidCompanies.PHP,
Historically,
the housing finance industry was dominated by HFCs. However, towards the end of
the 1990s, the scheduled commercial banks became very active in lending to the
housing sector in the backdrop of lower interest rates, rising disposable
incomes, stable property prices and fiscal incentives by the government.
While
banks depend on their own equity and reserves and large deposit base for
funding their housing loan portfolios, HFCs primarily depend on funding sources
such as loans from banks and financial institutions, financing from NHB,
borrowing through bonds and debentures, commercial paper, subordinate debt and
fixed deposits from public, besides their own equity & reserves.
Increased
competition in the housing finance industry has also led to the introduction of
new mortgage products in the market, such as variable interest rate loans, loan
for repairs and renovation, and customised products with features like
ballooning EMI, depending on the need and eligibility of the borrowers
concerned.
In
addition, some banks and HFCs also offer home equity loans (loans against the
mortgage of existing property), which may be used for non-housing purposes.
Home
Loan Disbursements..!
As
per CRISIL estimates, housing finance disbursements are estimated to have grown
by about 16.1 % in Fiscal 2012 to Rs. 2,04,400 (as compared with Rs. 1,76,000 crore in Fiscal
2011).
Over
the next five years, housing finance disbursements are projected to grow at a
CAGR of 16 % to reach Rs. 4,26,900
crore by Fiscal 2017. Increase in transaction volumes, rise in property prices
and higher loan to value (“LTV”) ratios are some of thekey drivers
behind the growth in disbursements in the housing finance industry. The year on
year growth (historical & projected) in the outstanding housing loan
portfolio in India is graphically represented in the chart below:
Source:
CRISIL Report: Retail Finance – Housing, October 2012
Outstanding Home Loans..!
The quantum of outstanding loans is
impacted by a combination of disbursements, repayments and pre-payments.
As per CRISIL estimates, housing finance
outstanding portfolio, i.e. the total loan book of a housing finance player,
grew by about 19 % Y-o-Y in Fiscal 2012 to Rs. 6,15,050 crore as compared with Rs.
5,17,360 crore
in Fiscal 2011, due to a steady growth in disbursements and lower prepayments.
The housing finance outstanding
portfolio is expected to grow at a CAGR of 17 % to reach Rs.
13,60,280 crore
in Fiscal 2017.
The below date shows the historic and
projected growth in the outstanding housing loan portfolio in India.
Outstanding housing loan portfolio in
India.!
Year 2009-10E 2010-11E 2011-12E
2012-13P 2013-14P 2016-17P
Outstanding ((in Rs. Bn) 4,362.9 5,173.6 6,150.5 7,163.7 8,424.2 13,602.8
Year on Year Growth --- 18.6% 18.9% 16.5% 17.6% 17.0%
Src: Repco Home Finance IPO Report.
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