Public Sector Banks Now Hold 52% Market Share in Home Loans
“Sensitivity to the rate changes is higher in external benchmark linked lending rate loans hence, it is quite possible that the lenders have been cautious to build this portfolio. However, with the peak of rate cuts behind us, we should see lenders shifting gears in this book,” added the report.
Mumbai: Public sector banks are consistently increasing their dominance in the individual housing loan market, expanding their share to 52 per cent of the total outstanding loans as on September 30, 2026 from 50 per cent in the same quarter of last year according to the data from the Reserve Bank of India (RBI). In contrast, private sector banks continue to cede market share which has fallen from 48 per cent in Q2FY25 to 46 per cent during Q2FY26 as they remain cautious in growing the segment.
Housing loan portfolio for banks grew by a modest 10 per cent year on year for 2QFY26 to over Rs 40 lakh crore led by 5 per cent volume growth and 5 per cent yoy growth in average ticket size as lenders saw higher repayments and higher balance transfers. Public sector banks' retail housing portfolio grew at about 15 per cent yoy compared to private banks’ sluggish growth at about 5 per cent year on year. Data showed that public banks are far stronger in the larger-ticket-size loans, a segment where private banks once held a higher market share. Nearly all lenders have pulled back on risk since FY2024, as the focus has either shifted to improving the credit profile after concerns raised in the unsecured portfolio.
A report from Kotak Institutional Equities, said, “We look at housing loans from three perspectives to measure affordability. Interest rates have declined meaningfully, income levels are holding up well (tax collection) and housing prices still look comfortable. We would probably see lenders getting a bit more comfortable once there is greater visibility of the profitability of these loans and ready to take a bit more risk than before.”
“Sensitivity to the rate changes is higher in external benchmark linked lending rate loans hence, it is quite possible that the lenders have been cautious to build this portfolio. However, with the peak of rate cuts behind us, we should see lenders shifting gears in this book,” added the report.
A whopping 80 per cent of the housing loans are in the Rs 10 lakh to Rs one crore ticket size by value with faster growth in higher-ticket-size loans. The top 7 states contributed about 70 per centd of the overall housing loans, with Maharashtra contributing 30 per cent of the overall loans. The Kotak report said that loan growth was higher in the larger-ticket size loans of Rs one crore to Rs 4 crore said the report.
