mumbai loan book growth for housing finance companies hfcs halved from 21 in the first half of fy19 to 10 in the second half bringing down fullyear growth to 16 for the first time in at least five years banks supported by portfolio buyouts outpaced hfcs in home loans and grew at 19 in fiscal 2019 according to a report by crisilafter witnessing good growth for the last two years and in the first half of fy19 most hfcs faced liquidity issues in the wake of the ilfs collapse the fourth quarter was spent by many companies in conserving liquidity and curtailing disbursements banks managed to gain market share in home loans from hfcs which were left with a loan book of rs 124 lakh crore at the end of the year a 16 increase yearonyearone of the factors that helped hfcs increase their market share in the last two years from 41 to 42 was the sharp growth in loans against property according to a report by edelweiss hfcs increased their share in the loans against property lap segment from 29 in december 2016 to 34 in december 2018 the lap market stood at rs 349700 crore as of december 2018 it was the lap segment and loans to developers which was responsible for the sharp distinction between the two halves these two segments accounted for a third of the total asset under management aum of hfcs as on march 31 2019 growth in these segments slowed to 5 annualised in the second half compared with around 28 in the first home loans held up better growing at close to 13 annualised compared with 18 in the first half according to crisil ratings senior director krishnan sitaraman access to funding will determine the growth prospects for hfcs as of now lenders and investors seem to be differentiating between hfcs preferring those with strong parentage and credit profiles and going slow on those with a large wholesale portfolio this will be reflected in business growth differing for these entities over fiscals 2020 and 2021 sitaraman said that growth was expected to revive to 1214 for hfcs though this would still be lower than levels seen in the past this growth will be supported by midteens growth for the two largest players constituting more than 50 of the industry aum the liquidity challenges following ilfs have had a double impact on hfcs besides reducing funding it has increased the risk of default from wholesale borrowers developers in recent months with incremental funding towards real estate coming off asset quality concerns in the developer financing book have increased the impact of refinancing slowing down will need to be monitored given that the ability of lenders to recover in case of default through liquidation of assets has not been tested in any material way till date said crisil ratings director subha sri narayananfuture growth for hfcs will be constrained with the national housing bank tightening the permissible leverage levels