It is on the cusp of a “golden age” where there’s massive opportunity for existing and new housing finance companies (HFCs) alike
Housing Finance sector in India is looking at exciting times ahead as the economy gathers momentum on the back of government’s focus on stimulating the economic growth.
It is on the cusp of a “golden age” where there’s massive opportunity for existing and new housing finance companies (HFCs) alike.
The sector has witnessed significant growth in the past one decade on the back of the steady growth in the economy, growing acceptability of home finance as an option for home purchase among consumers and rise in penetration of HFCs in various micro markets.
The future of housing finance segment will be defined by disruptive technologies and innovation with a bigger push to reach a larger set of customers. Embracing of interactive technologies (mobile apps, social media, geo-localisation software) will help in not only market segmentation but also reaching out to customers with product-specific to their financial needs. This will intensify competition in the sector and will make it imperative for HFCs to get flexible and adaptable to changing trends. Mortgage companies will have to emerge as a comprehensive financial solution provider to service the needs of the customer and the emerging low and middle income segment. Innovation and enhancement in products and services will help transform lives and drive financial inclusion.
Securitisation of home loan portfolio together with appropriate ratings and guarantee structures are imperative to support the growing resource needs of the financial system. Also, as a regulator of housing finance industry, the role of NHB is going to be extremely crucial in the evolution of the sector. NHB may have to shift their focus from being merely refinancer, to that of a market-maker. As the debt market in India deepens, we foresee a very vibrant secondary mortgage market, which along with securitisation will be critical in taking care of the burgeoning demand for housing finance.
As we foresee “specialisation” as key driver in financial services with Reserve Bank paving the way for entry of specialised banking, the day when mortgage banks get recognised as one of the critical contributors to the overall finance ecosystem is not far. In summing up, how well we structure the building blocks by assimilating these transformations in the socio-economic fabric of the nation will be crucial to ensure a self sustaining mortgage finance sector.
The writer is CMD, DHFL
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