Kotak Institutional Equities has noted that housing loan growth across the banking system remains weak, even as demand strengthens in the larger-ticket segment and public-sector banks outpace private lenders. According to the brokerage, disbursements have improved sequentially, but elevated repayments and continued balance transfers are limiting overall net growth, resulting in a sluggish expansion trajectory relative to the broader retail credit environment.
Kotak highlighted that despite muted growth, credit risk in home loans remains negligible, reflecting the segment’s traditionally stable asset quality profile, conservative underwriting standards and the sustained resilience of borrowers through multiple interest-rate cycles. The brokerage added that lenders, particularly private-sector players, remain cautious in their approach even though affordability remains comfortable and macro conditions are conducive. With policy rates now stabilised, Kotak expects lenders may gradually take more risk as rate cuts are behind, potentially aiding sentiment and supporting a measured revival in loan growth over the coming quarters.
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