State Bank of India grew its home loan book nearly 14% year-on-year, ICICI Bank expanded its mortgage portfolio by 13%, HDFC Bank grew its book by over 6%, and Kotak Mahindra Bank led the pack among private lenders with 18% growth.
Larger banks are leveraging lower funding costs, sharper pricing, and stronger distribution networks to crowd out smaller peers in what has traditionally been a relationship-driven segment.
Smaller banks, however, are finding the arithmetic difficult to justify. Axis Bank’s home loan book grew just 4% year-on-year, Federal Bank’s contracted 1.33%, and Yes Bank’s shrank 1%. “Fifteen-year home loans are getting priced at 7.15% and deposits were going at higher rates than that last quarter,” said KVS Manian, MD, Federal Bank.
For the large banks, home loans are increasingly being viewed not just as a lending product but as a gateway to a deeper, long-term customer relationship. “From a mortgage book perspective, it is not just the book, but the kind of primary relationship that we are all focusing on and that is going to be a large, sustainable franchise over the long run,” said Sashidhar Jagdishan, MD, HDFC Bank.
ICICI Bank said recent acceleration in mortgage growth reflects a more settled rate environment.