New Delhi, July 30 Retail mortgage-backed loans offered by non-banking financial companies (NBFCs) and housing finance companies (HFCs) in the country are projected to expand to Rs 20 lakh crore by FY28, from Rs 13 lakh crore as of March 2025, to which the share of affordable housing finance companies (AHFCs) would rise to Rs 2.5 lakh crore from Rs 1.4 lakh crore, a report said on Wednesday.
Mortgage loans by the NBFCs and the AHFCs are expected to expand at a CAGR of 17-19 per cent and 20-22 per cent, respectively, by FY28, credit rating agency ICRA said in its report.
“Over the next three years, retail mortgage loan growth will be driven by robust demand and the restricted availability of alternative credit options due to ongoing issues with unsecured lending," said A.M. Karthik, Senior Vice President and Co-Group Head-Financial Sector Ratings, ICRA Limited.
This sector has traditionally demonstrated strong performance, marked by low loan losses and healthy business returns, he added.
The housing finance companies (HFCs) accounted for about two-thirds of these overall mortgage loans, and within this, AHFCs constituted 11 per cent of the overall AUM (Rs 13 lakh crore) as of March 2025.
According to the report, the AHFCs have a higher share of self-employed borrowers and loans against property in their portfolio compared to other large HFCs focused on the prime borrower segments (prime HFCs).
The AHFCs have a sizeable share of smaller ticket loans, and their AUM growth has been quite steep in the recent past, resulting in low portfolio seasoning.
Some leading AHFCs, accounting for close to 70 per cent of the AHFC industry AUM, non-performing assets (NPAs) have remained under control at 1.1-1.3 per cent over the last three years, with average credit cost as a proportion of average managed assets being around 0.3 per cent over this period, the report stated.
As per the report, the AHFCs have an average LTV of around 55 per cent and have a sizeable share of loans extended for self-construction of homes ( around 40 per cent of AUM), which is expected to keep their credit quality under control.
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