New Delhi
India’s affordable housing finance sector is set to grow rapidly, with its assets under management (AUM) expected to reach ₹2.5 lakh crore by FY28, up from ₹1.4 lakh crore in March 2025, according to a report by ICRA.
The overall retail mortgage loan book of non-banking financial companies (NBFCs) and housing finance companies (HFCs) is projected to grow from ₹13 lakh crore to ₹20 lakh crore during the same period. Affordable Housing Finance Companies (AHFCs) are likely to grow at a 20–22% annual rate, while broader mortgage lending is expected to grow at 17–19% CAGR.
ICRA’s Senior Vice President A.M. Karthik said this growth is driven by strong housing demand and limited access to unsecured loans, which makes affordable home loans more attractive. The sector has seen low loan losses and stable returns historically.
HFCs currently manage two-thirds of total mortgage loans, and AHFCs make up 11% of the total AUM as of March 2025. These companies mostly serve self-employed borrowers and offer smaller ticket loans, often for self-construction, which makes up 40% of their loan book.
Despite fast growth, loan quality has stayed stable. Top AHFCs, covering 70% of the sector’s AUM, report non-performing assets (NPAs) of just 1.1–1.3%, with average credit costs at 0.3%. Their average loan-to-value (LTV) ratio is also healthy at around 55%, helping keep risks under control.
The report shows that AHFCs are playing a key role in expanding housing access, especially in under-served areas, while maintaining financial stability.
