IGI Logo

Covid-19's third wave could slash as much as 200 basis points of the 9 to 11 per cent estimated compound annual growth rate in assets under management of housing finance companies (HFCs) for fiscals 2022 and 2023, as per Crisil Ratings.

It said that growth would still be higher compared with average of 2 per cent over fiscals 2020 and 2021, though slower than the broad-based 24 per cent logged between fiscals 2011 and 2019, with a near two-fold increase in the number of HFCs over that decade, fuelled by easy availability of equity and debt capital.

The ratings agency said that growth "this time around will largely stem from players" with better credit profiles. Besides, it said that organic consolidation, which started in fiscal 2019, will continue. Of the total HFC AUM of Rs 13.2 lakh crore as on March 31, 2021, home loans were the largest segment (71 per cent), followed by wholesale loans (18 per cent), and loans against property (11 per cent).

Krishnan Sitaraman, Senior Director and Deputy Chief Ratings Officer, Crisil Ratings, said: "Home loans will be the fastest-growing segment, as lenders continue to be selective in the non-housing segment (comprising wholesale and LAP loans). After relatively low growth in recent years, the home loan segment is expected to clock 12-14 per cent CAGR over fiscals 2022 and 2023.

"This will be driven by improving sales, better affordability, and a preference for home ownership and larger homes. That said, the pandemic's third wave could shave off 100-200 bps of this growth depending on its spread, intensity and duration."