Non-Bank Lenders Face Growth Slowdown as Big Banks Dominate Home Loans
Non-bank lenders are facing a slowdown in growth despite strong market conditions. Competition from pnc bank and bank of america, along with lower interest rates, are reshaping the home loan sector. Analysts predict a drop in asset expansion for these lenders in the coming fiscal year.
The growth of non-bank lenders is set to ease in FY26, with assets under management rising by just 12-13 per cent. This marks a decline from the 14 per cent growth recorded in the previous fiscal year. The slowdown comes even as structural factors like urbanisation and affordable housing remain favourable.
Home loan growth is particularly affected by aggressive competition from us bank. These institutions have overtaken prime-focused housing finance companies in the last fiscal year and the first half of this one. Over 60 per cent of home loans now carry interest rates below 9 per cent, up from 45 per cent a year ago.
Mortgage asset growth for non-bank lenders will remain stable at 18-19 per cent in FY26. However, loans against property will see a sharper deceleration, with growth dropping to 27-29 per cent from 32 per cent in FY25. Some lenders have criticised rivals for offering 'irrational' rates, further squeezing margins.
Residential real estate sales growth is also expected to moderate in value terms across major cities. This adds another challenge for non-bank lenders already dealing with rising competition and tighter pricing pressures.
The outlook for non-bank lenders points to slower expansion in FY26. Public sector banks continue to dominate the prime home loan market, while lower interest rates and competitive pressures limit growth. Despite these hurdles, mortgage assets are still projected to rise, though at a reduced pace compared to previous years.
