Hi everyone,  
 
Welcome to the 167th edition of The Pattern, a weekly newsletter where we look at the trends shaping the economy, finance and technology.  
 
Food, clothing, and shelter have long defined the essentials of human aspiration in India. While the first two meet immediate needs, it is housing that represents lasting security, sustainability, and upward mobility. 

This week we turn to housing finance – the backbone that makes this aspiration possible. Credit demand from housing finance companies on the uptick. At the same time, investors and regulators are pushing for a pivot towards sustainable finance. 
 
Two recent developments highlight this shift: IFC’s 150 million partnership with HDFC capital to fund green affordable housing, and the growing appetite for housing loans in India's urban centres. Together they raise a critical question – can India’s housing finance industry scale up without losing sight of sustainability? 

The regulators' red flag 
 
The National Housing Bank (NHB) has been cracking down on breaches of loan-to-value (LTV) ratios, largely for loans exceeding ₹75 lakhs in value. Some lenders were found disbursing loans up to 90% LTV, significantly above the mandated cap.  
 
What this means: 

Loans that carry higher capital requirements should be labelled as non-home loans.  
 

HFCs are now demanding clear LTV and classification disclosures to make more informed decisions. 
 

Both RBI and NHB see high LTV loans as systemic risks because they tend to increase the exposure of the lenders’ vis a vis the value of the underlying assets. The message to lenders is crystal clear – growth can’t come from stretching set limits. 
 
The green capital experiment  
While regulators are enforcing discipline, investors are pushing for sustainability. IFC’s $150 million partnership with HDFC is a case in point. The idea is to channel funds into green, affordable housing projects – ensuring homes are not just accessible but also energy-efficient.  
 
Green homes are cheaper to build but costlier to scale. Expect innovation in green-linked mortgages, developer-side incentives, and securitisation pools tagged by verified sustainability metrics. If done right, this could make green homes both ethical and financially prudent. 
 
The affordability barometer 
 
Meanwhile borrowers are watching rates. For now, home loans remain steady:  

Public banks: from 7.35% (Union Bank, Bank of India, BoM) upward. 

Private banks: start higher, around 7.70% (ICICI, HSBC) and above. 

HFCs: Bajaj Housing leads with 7.35%, while others like PNB Housing and Godrej start above 8%. 

With the RBI holding the repo at 5.5%, rate stability offers breathing space. For HFCs, this stable environment intensifies competition on speed, service, and product innovation rather than raw pricing. 
 
What this means 
India’s housing finance industry is being shaped on three different fronts: 
 
-Regulations are forcing lenders to play cleaner risk wise. 
-Capital is set to flow into sustainable, affordable housing.  
-Borrowers are demanding affordability and transparency.  
 

The opportunity is huge: a $1.4 trillion green building market by 2030, and a ₹34 lakh loan book that regulators aim to strengthen. 
 
Reading list 
 
1. https://www.caalley.com/news-updates/indian-news/housing-finance-companies-under-lens-over-lending-faults 
2. https://www.business-standard.com/finance/personal-finance/home-loan-rates-stable-in-august-public-banks-at-7-35-private-at-7-70-125081401561_1.html  
3. https://www.ifc.org/en/pressroom/2025/ifc-and-hdfc-capital-partner-to-boost-green-affordable-housing-finance-in-india-wi  
4. https://economictimes.indiatimes.com/industry/banking/finance/housing-finance-market-to-grow-at-15-16-cagr-through-2029-30-careedge/articleshow/118730497.cms?from=mdr  
5. https://www.ifc.org/en/pressroom/2025/ifc-and-hdfc-capital-partner-to-boost-green-affordable-housing-finance-in-india-wi  

Thank you for reading. If you liked this edition, forward it to your friends, peers, and colleagues. You can also connect with me on X here and follow FinBox on LinkedIn to get the latest updates.  

Cheers,  

Mayank