Aptus housing book yield in closer to 14%, adding LAP and business loans which are higher yield bring the overall yield to 17%. There are some companies that charge even 20+% for housing like SRG housing. These are priced for the potential riskiness of the book. You can ask these Affordable housing companies have very good credit quality and their historical loan loss also low, so they should charge much less. But for every Aptus, Aavas, Home First, we have some many companies struggling in this space like Manappuram, Muthoot, Motilal Osiwal, Ujjivan. Look for the NPAs of the housing book of these companies. And there are lot of companies which does not survive.
But they cannot charge less even if they wish. For a HFC that deals with larger ticket, higher quality customers, credit rating companies are comfortable in letting leverage to inch up to 7-8 times, so they are getting low cost of funds and with higher leverage they can work with thinner NIM and still get a better RoE but for are AHFC they are still looking for a leverage of 4-5, some they have to work with much higher NIM to at least match same RoE. If they try to reduce further, business will not make any money, so companies will stop doing this line of business and EWS have to get money from local lenders and people are still charging 36% at least for these segments.
So 36% vs 17% - not a sin
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