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Non-Bank Mortgage Boom: 18-19% AUM Growth Amid Housing Market Shifts

Non-bank mortgage lenders are set for strong 18-19% AUM growth over the next two years. Different loan segments are growing at varying speeds, with home loans expanding moderately while LAP slows from previous highs. The sector benefits from improved affordability as incomes outpace housing prices and recent tax cuts boost disposable income. However, competition from banks and slowing real estate sales in major cities present ongoing challenges for non-banking lenders.

Key Points: Non-Bank Mortgage Finance AUM Growth 18-19 Percent Report

  • Home loans comprising 59% portfolio to grow at moderate 12-13% pace
  • Loans against property segment growth easing to 27-29% from 32%
  • Wholesale loan segment showing recovery with developer funding pickup
  • Improved affordability from income growth outpacing housing prices
2 min read

Mortgage finance AUM of non-banks to grow 18-19 pc: Report

Crisil Ratings projects 18-19% AUM growth for non-bank mortgage lenders, with home loans growing 12-13% and LAP slowing to 27-29% amid competitive pressures.

"Long-term factors supporting home loan demand remain strong - Crisil Ratings Report"

New Delhi, Nov 19

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.

- IANS

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Reader Comments

R
Rohit P
While the growth numbers look impressive, I'm concerned about the slowdown in residential sales in top cities. Banks already offer lower interest rates, so non-banks need to be more competitive in their offerings.
A
Arjun K
LAP growing at 27-29% is significant! Many small business owners like me use property loans for business expansion. The flexibility from non-banking companies is much better than traditional banks.
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Sarah B
The focus on affordable housing through interest subsidy schemes is exactly what India needs. Tier 2 and 3 cities will benefit the most from this growth. Hope the benefits actually reach the common people.
V
Vikram M
Good to see the wholesale loan segment recovering. Developer funding is crucial for completing ongoing projects. Many home buyers have suffered due to stalled projects in the past.
M
Michael C
The report mentions low mortgage penetration as a positive factor, but we should also consider if people are taking on too much debt. Financial literacy is equally important along with easy credit availability.

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