Testing Time For HFCs

Potential home buyers, shelving plans with the pandemic, will exacerbate the already weakening growth in Assets Under Management (AUM) of Housing Finance Companies (HFCs) this fiscal. AUM growth will decline for the industry and even turn negative for some HFCs, on heels of a tepid 5 per cent growth in fiscal 2020, diving all the way from 27 per cent in fiscal 2018.  Home sales are expected to drop sharply this fiscal. Further, prices are expected to fall across segments, with luxury segment the most impacted, leading to lower loan ticket size, hence, reduced disbursements. With funding access remaining a challenge, players are focussing on maintaining higher liquidity, which will also impact disbursements. That said, not all sub-segments of HFCs will perform the same - while home loans AUM is expected to witness low single digit growth, the non-housing portfolio - primarily...