Investment World
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Housing Finance
Money & Banking
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Housing Finance
Housing Fin.: Special treatment
Sanjiv Shankaran
HDFC has had reason to be pleased with every Union Budget in the last five years. Five years in a row, the budgets have provided fiscal incentives for individuals to invest in housing units, and the upshot is that HDFC's housing loan disbursement has grown at about 29 per cent over the last four years — and at a time when the economy is growing at an anaemic 5-6 per cent every year.
The current Budget has extended the life of the tax incentive for interest payable on a housing loan beyond its original deadline of March 2003. The extension of the fiscal benefit should benefit HDFC, LIC Housing Finance, ICICI Home Finance and Sundaram Home Finance, among others. The entire housing finance sector appears to have reaped the benefit of the incentives to promote housing. A proposal in the Budget promises to help all housing finance companies maintain current growth rates. First is the proposal to set up a Mortgage Credit Guarantee Scheme that will cushion companies against defaults. If such a scheme does see the light of day, housing finance companies will be able to extend loans to individuals who may not meet their eligibility criteria. The sector's high growth rate is likely to continue.
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