The affordable housing segment is entering a phase of sustained expansion, creating positive momentum for first-time homebuyers and value-focused property investors. Loan books of affordable housing financiers are expected to grow by 20–21% over the current and next financial years, outpacing the overall mortgage market by a comfortable margin.
This growth reflects rising housing demand, policy support, and increasing focus on financially inclusive homeownership.
Home Loans Continue to Drive Growth
Home loans remain the backbone of the affordable housing segment, with expected growth of 18–20%. This momentum is being driven by:
- Rapid urbanisation and migration to cities
- Strong end-user demand for budget-friendly homes
- Continued government support for affordable housing
Unlike the prime housing loan segment, competition from large banks is relatively limited here. This allows specialised lenders to offer more flexible eligibility norms, customised loan structures, and faster approvals, benefiting aspiring homeowners.
Why Lenders Are Becoming More Selective on LAP
While loan against property (LAP) has been a high-yield growth driver in recent years, lenders are now moderating expansion in this segment. Growth is expected to slow slightly as underwriting norms are tightened for certain borrower profiles.
This shift reflects a prudent focus on asset quality and long-term stability, rather than aggressive short-term growth—an encouraging sign for the overall health of the affordable housing finance ecosystem.
Stable Rates and a Supportive Lending Environment
Borrowers in the affordable housing segment tend to be less sensitive to interest rate fluctuations, helping lenders maintain stable yields. Additionally, increased reliance on bank funding is likely to lower borrowing costs gradually as repo rate cuts flow through the system.
Although credit costs may rise marginally in line with portfolio seasoning, overall profitability and lending activity are expected to remain healthy.
What This Means for Homebuyers
For homebuyers, the current environment offers:
- Steady availability of home loans
- More disciplined and transparent lending practices
- Sustainable interest rates that support long-term affordability
These factors make it an ideal time to plan a home purchase with clarity and confidence.
