Life may get tougher for mid, small size HFCs amid rising rates: Analysts

Analysts warn that housing finance companies (HFCs), which cater largely to affordable housing segment, may see some margin erosion

Shares of most housing finance companies (HFCs) have underperformed at the bourses – falling between 4.3 and 36 per cent – since the announcement of the first repo rate hike by the Reserve Bank of India (RBI) on May 4. This comes on the back of fears that sharp rise in rates and higher inflation can dent the housing demand in the near-term. This, in turn, will have a trickle-down effect on the demand for home financing, fear investors.

However, analysts believe fundamentally strong HFCs would be able to tide over the rate hike cycle even as they