Mortgage finance AUM of non-banks to grow 18-19 pc
Mortgage finance companies outside the banking sector are expected to see strong growth over the next two years, a new report said on Wednesday.
According to data compiled by Crisil Ratings, the assets under management (AUM) of non-bank mortgage lenders are set to rise by 18–19 per cent this fiscal and the next, matching the 18.5 per cent growth recorded last year.
However, the three key loan segments -- home loans, loans against property (LAP), and wholesale loans -- will grow at different speeds.
Home loans, which make up the largest share of the portfolio at around 59 per cent, will see moderate growth of 12–13 per cent this year and the next, slightly lower than the 14 per cent growth recorded last fiscal.
LAP, which accounts for about 32 per cent of the total AUM, will continue to grow faster than home loans but at a slower rate than before.
Its growth is expected to ease to 27–29 per cent, compared with 32 per cent last year, the report said.
The wholesale loan segment -- which includes developer funding and lease rental discounting -- saw a mild recovery in fiscal 2025. This segment is likely to pick up further, helping maintain overall sector momentum.
The report notes that long-term factors supporting home loan demand remain strong. India still has low mortgage penetration, and urbanisation is increasing.
Affordability has also improved because people’s incomes are growing faster than house prices, while interest rates remain lower.
Recent income tax cuts announced in the Union Budget will further boost disposable incomes, making borrowing easier. At the same time, reductions in GST on building materials and under-construction homes are expected to support affordability.
New policy measures, including the Interest Subsidy Scheme, should also help the affordable housing segment.
However, non-banking lenders face two key challenges. The first is tough competition from banks, especially in the prime home loan market, the report said.
The second challenge is the expected slowdown in residential real estate sales across the top seven cities, as per the report.
