Housing finance companies (HFC) across the nation were affected by liquidity and high costs of borrowing. This resulted in a slower growth in the last quarter compared to the year earlier.

The regulator - National Housing Bank data valued the loan books of 54 HFCs at Rs. 2, 20,396 up 18% over the last quarter of FY11-12. This is down from 22% growth in the last quarter of FY 10-11.

The HFCs had trouble to concentrate on growth owing to margin pressures , high costs of borrowings, and liquidity crunch. However, state owned banks with access to low cost savings bank deposits and current deposits were able to register an 18% growth in their loan books.

Tier II and tier III cities were a good prospect for companies, as first time home loan buyers showed interest in buying property at affordable prices. High prices of property in metros have caused a dip in demand for home loans.

Mr. Verma expects an 18 to 20% growth in loan books in FY13. The rising inflation would mean there are very little chances of the interest rates going down.

NHB is planning to launch a special refinance scheme for home loans up to Rs 5 lakh, which will be guaranteed by the proposed credit guarantee trust fund, said Mr. Verma. This would encourage the builders to build affordable homes.