Premium homes take precedence over affordable real estate; lenders rethink home-loan strategies: Report

Real estate developers today are also concentrated on high-end and luxurious projects, rather than affordable housing schemes. This is forcing lenders to reconsider their home loan market strategies, according to Antique Stock Broking's BFSI Conference 2025, cited by ANI. Developers are now reluctant to build homes under Rs 50 lakh due to high land costs, lower profits, and lack of government incentives.Housing finance experts at the conference talked about two major challenges in the affordable housing segment. First, developers are moving away from building budget-friendly homes. Second, traditional affordable housing projects in Tier 1 and 2 cities are being replaced by premium developments.The situation is particularly severe in cities like Mumbai, where soaring land prices have made affordable housing projects financially unfeasible for builders. Instead, there's a growing trend towards homes in the Rs 2-3 crore range, while affordable housing supply continues to shrink."Banks are not inherently set up to cater to the micro-level assessment required for affordable housing. They are expected to enter via co-lending partnerships rather than direct exposure," the after-conference report stated. Housing Finance Companies would have to expand their presence in Tier 3 and 4 cities to remain competitive.Meanwhile, as public sector banks and large banks dominated the salaried customer market with pre-approved offers, experts quoted by ANI, suggested focusing on proprietorship and partnership firms. They noted that while salaried cash flows are predictable but offer lower yields, non-salaried cash flows are more complex to assess but provide higher yields and face less competition from traditional banks."By targeting these premium customers, the company avoids putting in more efforts to disburse individual loans," the report added, explaining how lenders are adapting to the changing market landscape.