In the financial year ended March 2016, the housing credit grew by 19 per cent.
Overall housing credit stood at Rs 14.4 trillion as on March 31, 2017 as against Rs 12.4 trillion as on March 31, 2016.
Also Read
While the slowdown was across both housing finance companies (HFCs) and banks, the decline in the pace of growth of the latter was higher - from 18 per cent in FY 2016 to 15 per cent in fiscal 2017. It was largely because banks were operationally tied up in second half of FY 2017 on account of demonetisation, the report said.
"HFCs operating in the affordable housing space, with a total portfolio of Rs 1.2 trillion, continued to grow at a faster pace of 28 per cent in the previous fiscal compared to the industry," Icra's senior vice president and group head (financial sector ratings), Rohit Inamdar, said.
HFCs' growth was supported by an increase in supply due to the launch of affordable housing projects and the infrastructure status accorded to the sector. They were also helped by the improved borrower affordability supported by lower interest rates and the credit-linked subsidy scheme, Icra said.
Traditional lenders that have historically focused on the prime segment have also started lending to this segment, the report said.
The rating agency expects affordable housing finance to continue to outpace the industry, going forward as well.
Icra expects HFCs' gross non-performing assets (NPAs) to remain range-bound between 0.9-1.3 per cent in the current financial year.