The Hindu Business Line : `Home finance may post 40% growth'

THE estimated Rs 1,00,000-crore housing finance sector will continue to record an annual 35-40 per cent growth aided by tax incentives, low rates of interest, increasing disposable income and housing will continue to be the engine of economic growth of the country for the next few years, according to the Managing Director of Can Fin Homes Ltd (CFHL), Mr Peter D.F. Cardozo.

He said the company, which is planning to launch an insurance scheme bundled with its housing loans in the coming months, was also looking at the opportunity provided by home mortgage products, though it would like to adopt a cautious approach in this regard.

Speaking to Business Line in Coimbatore on Tuesday, the CFHL MD said that though the housing finance rates might appear to have bottomed out, they might go down fractionally, say by 0.25 per cent, before firming up in the later half of the current fiscal once the demand for finance from the industrial sector picks up. But the days of housing finance rates being in the region of 16 per cent-17 per cent were over and any increase in the home loan rates also would be by about 0.5 per cent, he said.

CFHL's cumulative sanctions were around Rs 3,125 crore and cumulative disbursement nearly Rs 2,670 crore at the end of 2003-04. The loan sanctions during last year were about Rs 467 crore and he hoped this year this would go up to Rs 600 crore. He expected the loan disbursement to reach Rs 550 crore this year compared with Rs 394 crore last year. PAT was Rs 20.70 crore last year. He said his company ranked third, along with Dewan Housing Finance, among the HFCs after HDFC and LIC Housing Finance.

Mr Cardozo said the delinquency rate in respect of repayment of mortgage loans was slightly higher compared with home loan. CFHL would adopt a cautious approach before entering this segment. But the company had `an open mind' and may look at such mortgage products to augment revenue since the margin on home loans is ``wafer thin', he said.