Affordable-housing finance companies to see moderation in AUM at 20-21%: Crisil rating

04 Feb 2026 Evaluate

Crisil rating has anticipated a moderation in assets under management (AUM) growth of affordable-housing finance companies (A-HFCs) within a stable range of 20-21% this fiscal and next fiscal. Despite the moderation, it said the growth still outpaces the 18-19% growth expected for the overall mortgage finance industry. Last fiscal, their AUM had grown around 23%. Meanwhile, the credit costs are expected to inch up with loan against property (LAP) segment expected to see moderation in growth as lenders recalibrate underwriting following asset quality pressure in some sub-categories of borrowers. The home loans growth anticipated to be steady at around 18-20%. Crisil noted that the profitability is seen a tad lower but healthy in both fiscals.

It highlighted that the LAP which is a key driver for A-HFCs in recent years due to attractive yields, will see growth moderating slightly to 24-26% this fiscal and next from around 30% last fiscal. This will be driven by lender prudence in response to asset quality concerns in specific sub-segments. Between fiscal 2024 and 2025, more than 70% of A-HFCs saw a notable increase in 90+ days past due loans in the sub-Rs 15 lakh category by around 25-30 basis points. It noted that this increase is due to seasoning and higher borrower leverage & spillover of asset quality pressures from the adjacent microfinance customers in certain pockets.

On home loans segment, Crisil said that relatively lower direct competition from banks compared with the prime lending segment, high growth potential fuelled by rising urbanisation, and supportive government policies for affordable-housing construction and financing have helped A-HFCs to outpace the overall housing finance industry. From a profitability perspective, it noted that customers in this segment are less sensitive to interest rates and thus yields are expected to hold. Further, the overall credit cost is expected to increase slightly in line with delinquencies, while return on managed assets is seen steady at around 2.5% for both fiscals. That would mark a modest decline of around 10 basis points from last fiscal.

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