Market Brief: Housing Finance Sector Trends The National Housing Bank (NHB) is actively pressuring Housing Finance Companies (HFCs) to lower lending rates and improve transmission to existing borrowers. This move follows a significant **125 basis point** reduction in the central bank repo rate over the past year. While the repo rate currently sits at **5.25%**, the NHB has observed that HFCs are raising funds at lower costs from markets and refinance schemes but are not yet passing these benefits to the retail level. Delayed Implementation Most mortgage lenders are deferring substantial rate cuts until **April 2026**. This delay is attributed to the scheduled annual review and reset of internal benchmarks. HFCs argue that meaningful downward movement in interest rates will only occur once the Marginal Cost of Funds Based Lending Rate (MCLR) reset takes place in the new financial year. Initial Market Responses Despite the general delay, some early movers have responded to the regulator's nudge with minor adjustments effective this February: * Aadhar Housing Finance reduced its retail prime lending rate by **15 basis points** to **17.50%**. * Aavas Financiers announced a similar **15-basis-point** cut, effective **March 1, 2026**. * NHB's own Prime Lending Rate (PLR) was recorded at **7.50%** as of **February 1, 2026**. Sector Performance and Exposure The HFC sector currently holds roughly **20%** of India's mortgage market. However, market share has seen a slight decline to **18.8%** as of early 2026, primarily due to the conversion of some HFCs into Non-Banking Financial Companies (NBFCs). Outstanding loans in the sector stood at approximately **₹9.59 lakh crore** by the end of the last fiscal year. Housing loans remain the dominant focus, accounting for **73.8%** of the total credit extended by these institutions. Regulatory and Economic Context The RBI recently maintained a neutral stance, keeping the repo rate unchanged at **5.25%** in its February meeting to balance growth with a projected inflation of **2.1%**. For borrowers, current floating-rate home loans across the broader market are typically ranging between **7.10%** and **8.50%**, depending on credit scores and lender types. The NHB continues to leverage its role as a key refinance provider to ensure that the sharp fall in wholesale funding costs—with refinance rates near **7%**—reaches the end consumer to support housing affordability.