Mumbai, Aug 18 (PTI) Recovery in economic activities and pent-up demand are likely to help in improvement of asset quality of home loans in the long term and affordable housing segment will lead the recovery in housing finance companies, according to a report.

Domestic rating agency Brickwork Ratings in a report released on Wednesday said it expects the macro environment to remain strong supported by stable (and improved) demand in an era of lowest interest rates ever witnessed in India.

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"While pent-up demand has been helping the sector afloat amidst the pandemic, the recovery in the economic activities will provide further fillip to the revival of asset quality of the home loans in the long term. It is expected that the affordable housing segment will grow much stronger and lead the sector (housing finance companies) going forward," the agency said.

Ongoing lowest interest rate regime, subdued prices and government's push towards affordable housing segment aid the buyers' sentiments, it said.

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The demand from homebuyers is picking up indicating the potential growth across the various categories of home financers, the agency said.

Also, the developers are returning to the market with new launches showing a positive trend in Q1FY22, mostly in the mid-segment housing, it said.

Government measures like stamp duty reduction, loan restructuring and credit infusion have induced confidence in the developers.

"We also expect the normalcy or near normalcy situation to be around Q4 FY22 or Q1 FY23 owing to speedy vaccination drives even as approvals for newer vaccines are awaited, which in turn, would result in opening up of the economic activity to the fullest, thereby paving way for a full recovery," the agency said.

(The above story is verified and authored by Press Trust of India (PTI) staff. PTI, India’s premier news agency, employs more than 400 journalists and 500 stringers to cover almost every district and small town in India.. The views appearing in the above post do not reflect the opinions of LatestLY)