Affordable housing finance companies have demonstrated exceptional performance in the June 2026 quarter, with multiple players reporting 30%+ growth in disbursements. According to The Financial Express, this growth momentum is driven by the central government's focus on low-cost housing in urban and rural areas. The affordable housing finance segment, which tends to have relatively small loan books, has reported strong growth in disbursements for home loans and other retail loans, with companies like Aavas Financiers growing 41% year-on-year to ₹1,613.9 crore, Home First Finance Company India achieving 31% growth to ₹1,628.4 crore, and Aptus Value Housing Finance India posting 36% growth to ₹1,053 crore. This performance comes from the government's objective to aggressively promote home ownership amongst economically weaker sections in urban and rural areas.
The Pradhan Mantri Awas Yojana – Urban 2.0 is providing a significant catalyst for affordable housing finance growth. As reported by The Financial Express, this scheme seeks to address the housing needs of 1 crore urban poor and lower middle-class families between 2024 and 2029. The scheme is targeted at economically weaker sections (EWS) and lower income groups with annual income ranging between ₹3 to 6 lakh, with maximum housing loan available at ₹25 lakh. This creates a clear market opportunity for affordable housing finance companies, which typically provide home loans between ₹5 lakh to ₹12 lakh. The government's focus on promoting home ownership among these economically weaker sections is driving the strong growth momentum across the affordable housing finance sector.
Affordable housing finance companies are demonstrating significantly higher net interest margins (NIMs) compared to Bajaj Housing Finance. According to The Financial Express, affordable housing finance companies achieved NIMs in the range of 5.8% to 7.7% in the June 2026 quarter, while Bajaj Housing Finance reported NIMs of 3.7% in the same quarter. This margin advantage is attributed to the companies' diverse lending activities, including high-margin loans against property and SME loans. Aavas Financiers reported NIMs of 7.7%, Home First Finance achieved 6% NIMs, and Aptus Value Housing Finance maintained 9% spreads. The higher margins are enabling these companies to achieve superior Return on Equity (RoE), with Aptus Value Housing Finance leading at 20.1%, Home First Finance at 15.7%, and Aavas Financiers at 13.9%, compared to Bajaj Housing Finance's 12.1% RoE.
Lenders are actively expanding into Tier 2 and Tier 3 cities, gaining customers new to the affordable housing market. As reported by The Financial Express, companies are sourcing affordable loans through selected Prime and Emerging Market branches, with PNB Housing Finance generating almost ₹30 crore of affordable disbursements in June. Aavas Financiers operates 440 branches across 15 states, Home First Finance has 175 branches across 13 states, and Aptus Value Housing Finance maintains 372 branches in southern, western and eastern states. This expansion strategy is enabling lenders to reach customers who were not simply moving from another lender, with some recent growth coming from customers who are new to the affordable housing market. The companies are focusing on small home loans in tier-II, III and IV towns, with Aptus Value Housing Finance's average home loan size at ₹9.7 lakh and small business loans averaging ₹9.1 lakh.
Aptus Value Housing Finance is raising its average loan size and using customer selection to target borrowers it considers higher quality. According to The Financial Express, the company is using 'calibrated customer selection strategies' to onboard higher quality customers. The company has adjusted lending rates on selected loan sizes as part of its customer acquisition strategy, with home loans accounting for nearly 70% of its loan portfolio and an average home loan size of ₹9.7 lakh. Aptus Value Housing Finance's spread was 9% compared to 8.7% a year earlier, with net NPAs as a percentage of loans at 1.3% compared to 1.5% a year earlier. This approach demonstrates how lenders are becoming more selective in their approach to affordable housing finance, focusing on quality over quantity while expanding their geographical reach and maintaining stable asset quality across their portfolios.
