Loan-Against-Property Growth to Moderate to 27–29% in FY25: Crisil Report

The report by Crisil released on Wednesday claimed lending growth at non-bank lenders may decelerate in FY2026 as public sector banks are playing an aggressive role in the market. Although favorable conditions appear to persist, the AUM of non-bank lenders is likely to grow 12-13 percent, said the Crisil report. Lower than the growth of 14 percent witnessed in the previous fiscal year.

According to the report, challenges facing non-bank lenders include "intense competition" from banks. This competition dominates housing lending. "Public sector banks have outperformed home loan-focused housing finance companies (HFCs) in the last fiscal year and the first half of this fiscal year," said Subha Narayanan, director of the agency. Narayanan said that competition in pricing has led to strong growth in banks' low-interest home loans. The share of portfolios with interest rates below 9 percent has increased from 45 percent last year to over 60 percent by March 31, 2025. Narayanan said, "Many large HFCs are facing a growing number of customers seeking balance transfers."

CRISIL said that home loans are the largest segment of mortgage assets under management for non-bank lenders, contributing 59 percent of the total. Recently, some lenders have expressed concerns about competition in the housing loan market, especially the "unreasonable" rates offered by government lenders. This is largely responsible for the slow growth of housing loans.

The rating agency said that while growth is slowing, structural factors for the home loan sector remain stable. Revisions in income tax slabs and the rationalization of GST are also key factors. The agency said that AUM growth in loan-against-property is expected to decline from 32 percent to 27-29 percent in FY2025. "Many large HFCs are facing an increasing number of customer balance transfer cases," Narayanan said.