Rising Interest Rates affects Housing Finance Companies
HDFC posted a marginal growth in the net profit; however LIC Housing and Dewan Housing both reported a severe drop in the financial market. During the month of June 2011, both of these financial sectors reported a severe decline in sanctioning loans and there are few borrowers approaching them for funding. The actual impact is seen on the HFC (Housing Financial Companies) which may be hit by the fall in revenues in completely changed scenarios.
The sharp rise in interest rates over the previous financial year has resulted in discouraging the home buyers impacting the HFC. HDFC is seemed to be focusing on the fast growing cities and towns rather than on the metros. This strategy of idea has leaded them to 22 percent hike in loan sanctions when compared to previous four quarters.
The quality assets of the bank are likely to be affected with the raising rate scenario also leading to the slowdown in the demand. Decreasing rate of HDFC and LIC Housing has marginally risen. However Dewan Housing reports the decreased loan portfolio by 32 bps to 0.77 percent in 2012.
All of these financial fluctuations may not reflect on the performance of India’s Biggest Mortgager HDFC reports stable earnings. However the peer mortgagers LIC and Dewan Housing are facing a tough time. HDFC is given its status as dominant performer in the financial industry and proves no close competitors also one of the consistence performers of Indian Companies.
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