Affordable housing financiers now attractively valued after correction

Affordable housing financiers face slower growth, higher delinquencies and weak branch productivity despite strong demand, even as falling CoF supports spreads and valuations turn attractive

The affordable housing financiers (AHF) segment is a long-term structural story, given low mortgage penetration and favourable policy. The industry is looking at stricter underwriting and a focus on branch productivity.

 

The Q2FY26 was muted and it led to price corrections. Demand is improving but concentrated in larger-ticket loans. Around 80 per cent are in the ₹10 lakhs-₹1 crore ticket size with faster growth in higher ticket sizes.

 

Interest rates have declined meaningfully. But AHFs faced headwinds in Q2, marked by slow disbursements, elevated delinquencies and resultant increased credit costs. AHFs may also have scalability challenges and there’s rising competition.