Stocks of housing finance companies gained momentum on Thursday after the Cabinet approved the enhancement of the carpet area of houses eligible for interest subsidy under the credit-linked subsidy scheme (CLSS) for the middle income group (MIG) under Pradhan Mantri Awas Yojana (Urban) scheme.
Reacting to the announcement, the shares of Can Fin Homes surged over 5 per cent to end the session at Rs 449.20, up 2.7 per cent, while Dewan Housing Finance (DHFL) gained 3.1 per cent during the day. GIC Housing Finance and LIC Housing Finance gained 1.7 per cent each in intra-day trade. The country’s largest mortgage lender HDFC gained close to 1 per cent to close the session at Rs 1,663.95 on the BSE.
Shares of housing finance companies were under pressure due to the prevailing sluggishness in the realty sector.
While GIC Housing Finance and Can Fin Homes came off 32 per cent and 33 per cent since the middle of June 2017, LIC Housing Finance declined 26 per cent during the same time period.
The increase in carpet area will give individual in MIG II category a wider choice in developers’ projects. Under the scheme, middle income groups with annual income of above rupees six lakh and up to Rs 18 lakh per annum are eligible for interest subsidy on housing loans.
The prime minister had announced interest subsidy of 4 per cent on housing loans of up to Rs 9 lakh of those with an income of Rs 12 lakh a year and of 3 per cent on housing loans of up to Rs 12 lakh of those earning Rs 18 lakh per annum.