The underlying demand for has remained strong so if interest rates rise by even another 25-50 basis points, over the 75 basis points in December, demand should not get hurt. were at 11% a couple of years back so if they head up to those levels, it is unlikely to hurt demand. Yields too should not suffer. Of course our loans to the construction sector have come off and these attract yields of 13-14% which is about 300 basis points higher than yields from individuals, but then the risks in lending to companies is far higher.
Since the demand remain strong and prices have risen steeply only in some pockets like South Mumbai, we believe a disbursements target of 20-25% is reasonable. The average ticket size has remained fairly flat over the last year or so at Rs 18 lac and the demand is pretty much even across the country. Moreover, the average loan to value ratio for us is about 64% though of course, we now have a cap of 80% after the change in NHB’s rules.
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