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India's largest mortgage lender is betting on the 'feel good factor'

In an exclusive interview with CNBC-TV18, Keki Mistry, the Vice Chairman and CEO at HDFC, said that the feel-good factor in the economy is very high at the moment and thus rate hikes in the near-term won't affect sentiments too badly.

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By Abhishek Kothari  Nov 4, 2022 12:55:51 PM IST (Updated)

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India's largest mortgage lender HDFC beats analyst estimates when it reported its second-quarter earnings. In an exclusive interview with CNBC-TV18, Keki Mistry, the Vice Chairman and CEO at HDFC, said that he expects the positive momentum seen in the Indian market to only build from here on.

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Mistry said that the lender has seen good growth in the reported quarter across geographies, be it metros, or tier-II and III towns.
"The momentum is strong and continues to remain strong. The feel-good factor in the economy is very high at the moment. We are seeing growth coming from the metros, Mumbai, Delhi, Bangalore, and Pune and also see equally strong from the tier-II and tier-III towns," he said.
But will the mood be dampened if the central bank (RBI) raises lending rates further? After all, the US Fed raising rates by 75 bps on Wednesday dampened sentiments on Wall Street. Mistry does not believe that it will be so in India.
He reasons that rates go both up and down and not that rates have gone up more than come down. Whilst there is obviously some impact on consumer sentiment when rates go up, it does not have a that significant impact on demand.
"For the simple reason that a housing loan is a 15-year loan. Even though the duration is shorter and because it's a 15-year loan, and customers only get floating rate loan products, it really does not make so much difference where interest rates are at the point of time when you take a loan," he elaborated.
Another interesting factor which augurs well for the housing segment is that the country has a young population.
"More people are getting to an age where they will need a house. So it's a necessity, and it’s a need. It's not just an investment people make. So penetration levels are still low and the young population's affordability is still very good," said Mistry.
For the full chat and more on the earnings, watch the interview

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