Housing finance companies may miss out on festive demand

Housing finance companies (HFCs) betting big on the Pradhan Mantri Aawas Yojana (PMAY) and Affordable Housing Refinance Scheme to prop up their mortgage books may not see a boom in demand this festive season as the schemes are yet to be rolled out.

These specialised mortgage lenders are still awaiting implementation guidelines from the government to roll out the PMAY subsidy scheme, industry executives said.

“We were hoping these schemes would be rolled out during the festive season – that is when we see most demand, but it’s been more than a month and we are still awaiting execution guidelines for PMAY,” said a senior official with a housing finance company.

The government had said the PMAY scheme will be implemented from September 1, while the refinance scheme was to be implemented from October 1. But procedures to implement these schemes have not been communicated yet.

“The government has to spell out clearly how HFCs need to apply for the PMAY subsidy,” another industry official said. “Also, for the refinance scheme, the National Housing Bank (NHB) needs to issue a notification,” he said.

Under the PMAY scheme, homebuyers can avail loan subsidy totalling ₹1.80 lakh on loans with a maximum loan value of ₹25 lakh. This subsidy will be paid in five yearly instalments of ₹36,000.The loan subsidy amount will be constant at ₹1.80 lakh for economically weaker section (EWS), lower income group (LIG) and mid-income group (MIG) customers with an annual household income of up to ₹3 lakh for EWS, up to ₹6 lakh for LIG and up to ₹9 lakh for MIG.Under the refinance scheme, HFCs can avail refinance from the Affordable Housing Fund for affordable housing loans disbursed in the previous 12 months. Refinance offered by NHB will be at a fixed rate of interest of around 5% per annum.