Housing finance companies rally 2-8% after rationalisation of risk weights on housing loans

Housing finance major HDFC gained 2.5 percent on October 9. The stocks has already rallied 9 percent in last few days

Share price of housing finance companies gained 2-8 percent intraday on October 9 after the Reserve Bank of India rationalised the risk weights on housing loans.

LIC Housing Finance was the biggest gainer with 8 percent gains, followed by GIC Housing Finance 3 percent. Indiabulls Housing Finance and Can Fin Homes gained 2 percent each.

Housing finance major HDFC gained 2.5 percent on October 9. The stocks has already rallied 9 percent in last few days.

"Under the extant regulations, differential risk weights are applicable to individual housing loans, based on the size of the loan as well as the loan-to-value ratio (LTV)," RBI governor Shaktikanta Das said in its policy statement.

"In recognition of the role of the real estate sector in generating employment and economic activity, it has been decided to rationalise the risk weights and link them to LTV ratios only for all new housing loans sanctioned up to March 31, 2022. This measure is expected to give a fillip to the real estate sector," he added.

"It is a right policy and right thing to do. Earlier the risk is depend on size of housing loan and quantum of loan, but now the risk is not depend on size of loan. The cap on amounts has been removed and housing loan is safer now. I really like the measures. Also the measure is available to all home loans," Keki Mistry of HDFC said.

The Reserve Bank of India has kept repo rate unchanged at 4 percent and maintained accomodative stance.

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