The demand for home loans is expected to remain robust for an extended period of time as home sales have grown at over 35% on a yearly basis, says Tata Capital Housing Finance Managing Director Sarosh Amaria.
“The traction for homes have been especially strong in markets like Mumbai Metropolitan Region and Pune. I see this demand continuing for some time on the overall home loans and the housing finance market,” he said, adding that there is genuine demand and growth rates have been strong irrespective of the fact that the repo rate has risen by 250 basis points since May 2022.
Around 380,000 homes were sold in 2022-23(April-March), higher than the 250,000 homes sold in 2021-22.
On the other hand, recent data released by Anarock Research indicates that the contribution of affordable housing segment to overall sales has been declining due to high land cost, buyers’ economic situation and lack of financing options.
Here, Amaria feels that an interest subsidy scheme will provide a boost to the affordable housing segment. The segment has houses priced under Rs 40 lakh.
“I think the government is pretty serious in this sector, and it is possible that a subsidy may be given for the affordable segment. This subsidy will give a boost to the segment,” he said.
Last week, Reuters reported that the government is considering spending Rs 60,000 crore to provide subsidised loans for the small urban housing over the next five years.
The report said that banks are likely to roll out the scheme in a couple of months, ahead of state elections and national elections in mid-2024.
Tata Capital Housing is a wholly-owned subsidiary of Tata Capital. The company’s products include loans for purchase and construction of a residential unit, purchase of land, home improvement loans, and project finance loans to developers. It expects to increase assets under management to over Rs 50,000 crore by March 31, 2024 from Rs 38,000 crore a year ago .
Around 82% of the company’s loan portfolio is comprised of retail loans, whereas construction finance makes up the remaining 18%.
“We want to make sure that the quality of assets is extremely good at all points of time. Our pace of growth will surpass the industry by a reasonable amount. But, we will grow responsibly,” he said.
Going ahead, the company will tap the digital route to acquire more customers. While home loans will remain the primary focus, the company will improvise, and look at more derivatives of certain products within its core segment. It will also open more branches in tier-3 and tier-4 cities.
“We will definitely grow in the top 10 markets. But, we will get better yields as we move into tier-3 and tier-4 cities,” he said.
While the company does not have any co-lending partnerships at present, it is assessing tie-ups with smaller entities. Here, a majority of the loan would be reflected on Tata Capital Housing’s balance sheet.
The company has various sources of funds including bank borrowings, bond market borrowings, and external commercial borrowings, and it will explore more avenues to raise funds going ahead.
Amaria feels that an additional borrowing of Rs 8,000 crore would be sufficient for the company to meet its assets under management target for the current financial year.
“Also, we are receiving equity funding from the parent at all points of time. So, there is no issue on that front,” he said.