ICRA predicts substantial growth for mortgage loans. NBFCs and HFCs will see loans increase over the next three years. ICRA expects NBFC mortgage loans to grow by 17-19%. Affordable housing finance companies (AHFCs) could see 20-22% growth. Total mortgage loans are projected to reach 20 trillion rupees by FY2028. This is up from 13 trillion rupees in March 2025. AHFC loans are expected to rise to 2.5 trillion rupees. They were 1.4 trillion rupees previously.
Strong demand drives this mortgage loan expansion. Unsecured lending issues limit other credit options. This sector shows solid performance. It has low loan losses and good returns. HFCs held two-thirds of mortgage loans in March 2025. AHFCs made up 11% of the total assets. AHFCs often serve self-employed borrowers. They offer more property-backed loans than prime HFCs. AHFCs also hold many smaller loans. Their assets grew fast, meaning less portfolio seasoning.
AHFCs will need more staff and branches. This helps manage loan creation and collections. They manage credit risk with careful loan-to-value limits. Higher yields also help offset risk. Stable operations and smart credit rules are vital. This is key for AHFCs to operate at a larger scale.