Public sector banks (PSBs) have tightened their grip on India’s housing finance market, overtaking private lenders in both value and volume of home loan originations in Q1 FY26. Backed by competitive interest rates, improved services, and government affordability schemes, PSBs’ market share surged sharply, while private banks ceded ground despite maintaining the highest average loan size.

The shift marks a significant rebalancing in the sector, with PSBs leading even in the premium ₹75 lakh-plus loan category, once dominated by private lenders.

According to the latest data from CRIF High Mark, a credit information bureau, PSBs’ share of home loan originations by value jumped from 37.6 per cent in the first quarter of FY25 to 46.2 per cent in Q1 FY26, while their volume share rose from 36.5 per cent to 41.9 per cent over the same period. In contrast, private sector banks witnessed a sharp drop — their value share declined from 35.2 per cent to 28.2 per cent, and volume share slipped from 25.2 per cent to 22.0 per cent year-on-year.

Loan origination is the process by which a borrower applies for a loan and a lender processes that application, leading to the approval, documentation, and disbursal of the loan.

Despite the dip in market share, private banks continued to command the highest average ticket size at Rs 41 lakh, although this marked a 3.3 per cent year-on-year decline. PSBs came in next with Rs 35.3 lakh, registering a notable 12.6 per cent increase, while Housing Finance Companies (HFCs) reported an average ticket size of Rs 24.6 lakh, up 11.8 per cent over the previous year, CRIF High Mark said.

The growth in originations value has been primarily driven by PSBs, which recorded a growth of 36.1 per cent year-on-year, compared to -11.2 per cent degrowth for private banks, and a 7.1 per cent increase for HFCs in Q1 FY26.

The average ticket size increased from Rs 30.4 lakh in the June quarter of FY25 to Rs 32.0 lakh in Q1 FY26, and up from Rs 28.0 lakh in Q1 of FY24, indicating a clear shift toward higher ticket sizes among borrowers, it said.

One of the most striking shifts in the housing loan market has been the rise of the Rs 75 lakh-plus loan category, which became the largest segment by origination value in Q1 FY26. This segment accounted for 38 per cent of total home loan value, up from 33.6 per cent in the June quarter of FY25, overtaking the Rs 5–35 lakh bracket that previously led.

Here too, PSBs stole the spotlight, increasing their value share in the Rs 75 lakh-plus segment from 38 per cent to 51 per cent, firmly taking the lead. Private banks, on the other hand, saw their share fall from 44 per cent to 33 per cent, while HFCs maintained a stable 12 per cent across both quarters, CRIF High Mark said.

Still, in terms of volume, the Rs 5–35 lakh loan range remains dominant, underlining the persistent demand for affordable housing across the country. Analysts suggest this reflects strong traction in tier 2 and 3 cities, where PSBs have a wider reach and better penetration compared to their private counterparts.