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Indian Housing Finance

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The total o/s housing loans in India is ~8.3% of its GDP (at current prices) in FY12, indicating a huge potential market due to its lower mortgage to GDP ratio compared to its Asian peers like – China (20%), Singapore (54%), Korea (36%) and developed economies of USA (77%), UK (85%). CARE Research estimates that total housing loan (HFC + Banks) to grow @ CAGR of 19% during FY13-FY15e, leading to total housing loan market of Rs. 11,579 bn in FY15e (from Rs. 6,896bn in FY12). CARE Research expects HFC loan book to grow at a higher rate compared to housing loan provided by banks.

CARE Research estimates NIM to remain subdued in FY13e on 1) competitive loan pricing, 2) lower credit off take to builder loans (interest rate being ~400bps higher) & 3) higher cost of fund on account of funds sourced at higher interest rates (which may lead to cyclical compression in HFC spreads due to the wholesale-funded nature of their liabilities). However, CARE Research estimates NIM to expand by 20-40 bps in FY14e.

The HFCs have been able to bring down the non-performing assets (NPA) from ~4% in FY04 to ~0.75% in FY12. It is pertinent to note that HFCs have maintained comfortable level of NPA during global economic slowdown indicating their robust business practices. CARE Research expects favorable regulatory policies will continue to support the growth of Indian housing finance industry. CARE Research is of the view that the recent steps such as formation of mortgage guarantee company (IMGC), proposal of Real Estate Regulatory Bill 2011, proposal of covered bond and approval of ECB are the positive development for the industry.

CARE Research’s report on the ‘Indian Housing Finance Industry’ seeks to answer questions such as: what is the estimated Housing loan growth over the next three years? What is the current growth rate of Housing Finance companies? What is the outlook and concern housing finance industry? What are the key emerging trends in the housing finance segment? What is the regulatory scenario of Indian housing finance industry? What is the current status and outlook of the securitization and covered bond market and comparison with global markets?

The report is indispensable for any company operating in housing finance industry, Non banking finance companies (NBFCs), Micro-finance institutions, banks/ FIs, policy makers, research & academic organizations, other international and national agencies, etc. Additionally, the quarterly updates (for the period Q1FY14 to Q4FY14) accompanying the subscription of the said report would form a potent tool for the subscribers to keep abreast of the happenings in the industry.

Table of Contents

Outlook and Challenges
Outlook on the Indian Housing Finance Sector
Outlook on the total housing loan (HFCs + Banks) growth
Outlook on the Net Interest Margins (NIMs)
Outlook on the asset quality (NPA)
Outlook on the Capital Adequacy Ratios (CAR)
Outlook on Return ratios: ROA/ROE
Key Challenges of Indian Housing Finance sector
Key emerging trends in Indian Housing Finance sector

Overview of Indian Housing Finance Industry
Industry growth and structural drivers
HFCs loans outpacing the bank housing loan growth
Drivers of housing loan demand

Introduction to Indian Housing Finance Industry
Evolution of housing finance in India
Component of housing finance
Funding sources in the sector
Housing microfinance in India
Major consolidation in housing finance sector
Kay challenges faced by Indian housing finance sector

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