With the nation’s largest mortgage financier HDFC Ltd merging with HDFC Financial institution, banks which might be already the dominant gamers within the dwelling mortgage phase are prone to achieve extra market share. A number of years in the past, housing finance corporations (HFCs) had been gaining market share from banks in particular person housing loans however it diminished after the IL&FS disaster.
In accordance with a current report from CRISIL, the property underneath administration of HFCs have been ₹13.2-lakh crore as of March 31, 2021. Since HDFC’s AUM of ₹5.69-lakh crore, accounting for 43 per cent of the phase is now getting transferred to HDFC Financial institution, the proportion of housing loans held by banks will improve additional.
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Over three-fourths of the mortgage e-book of HFCs is made up of particular person housing loans. Excellent particular person housing loans of HFCs as of September 2021 have been ₹7.43-lakh crore. However this amounted to a market share of simply 32 per cent, as per the Nationwide Housing Financial institution’s (NHB) report of ‘Pattern and Progress of Housing in India 2021’.
Scheduled business banks had the lion’s share in particular person housing loans with a market share of 68 per cent. The market share of banks in particular person housing loans has been growing over the yr, rising from 62 per cent in 2017-18 to 67 per cent in 2019-20. In the meantime, the market share of HFCs diminished from 38 per cent to 33 per cent on this interval.
“The merger of HDFC with HDFC Financial institution will result in extra of the market share of housing finance going to banks. The market share of HFCs within the phase had been growing however it is going to scale back to about 25 per cent put up the merger,” stated an trade supply.
Unsure occasions
Specialists additionally word that the merger of HDFC Ltd with HDFC Financial institution, although it will likely be accomplished in a interval of about 18 months, comes at a time when there’s uncertainty over methods by different giant housing finance corporations.
The erstwhile Dewan Housing Finance Company Ltd is now with Piramal Capital and Housing Finance Firm Ltd whereas there are additionally questions over the way forward for LIC Housing Finance. Life Insurance coverage Company of India, in its DRHP, has stated that both IDBI Financial institution or LIC Housing Finance must exit the house mortgage enterprise by November 2023. Different giant gamers embrace IndiaBulls Housing Finance and PNB Housing Finance.
“Virtually all the highest HFCs are going by way of fascinating occasions. The phase will ultimately see extra medium to small dimension gamers come into focus,” the supply famous, including that there are solely 12 HFCs which have property underneath administration (AUM) of over ₹15,000 crore and 5 with AUM between ₹10,000 crore to ₹15,000 crore.
Residence mortgage progress outlook
In all, there are about 102 HFCs within the nation. The outlook for dwelling mortgage progress can also be optimistic with sturdy demand for dwelling loans, and each banks and HFCs are working to extend their market share. The co-origination mannequin is seeing good participation from each banks and HFCs.
Specialists, nonetheless, famous that clients will stay insulated from these developments and can, the truth is, profit from the merger of HDFC and HDFC Financial institution. “Prospects will profit from the decrease price of funds out there by way of HDFC Financial institution as soon as the merger takes place,” stated Deo Shankar Tripathi, Managing Director and CEO, Aadhar Housing Finance.
The merger can even give a giant enhance to HDFC Financial institution, which has simply an 11 per cent contribution from mortgages in its mortgage e-book. HDFC Ltd has complete advances of ₹5.25-lakh crore as of December 3, 2021, with particular person loans making up 77 per cent of its e-book. It has 651 places of work inclusive of 206 retailers of HDFC Gross sales.
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April 11, 2022
