Crisil Ratings on Tuesday said disruptions due to the third Covid wave could shave off as much as 200 basis points from the growth in assets under management of housing finance companies in the current and next financial years.
However, growth would still be higher compared with average of around two per cent over fiscals 2020 and 2021 though slower than the broad-based 24 per cent logged between fiscals 2011 and 2019, it said in a report.
“The third wave of the COVID-19 pandemic could slash as much as 200 bps (basis points) off Crisil Ratings’ base case estimate of 9-11 per cent Compound Annual Growth Rate (CAGR) in the AUM of housing finance companies for fiscals 2022 and 2023,” the report said.
Of the total Housing Finance Companies’ (HFCs) AUM (Assets Under Management) 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).
The agency’s Senior Director and Deputy Chief Ratings Officer Krishnan Sitaraman said home loans will be the fastest-growing segment as lenders continue to be selective in the non-housing segment, comprising wholesale and LAP (Loan Against Property) 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, driven by improving sales, better affordability, and a preference for home ownership and larger homes, he said.
“That said, the pandemic’s third wave could shave off 100-200 bps of this growth depending on its spread, intensity and duration,” Sitaraman said.