LIC Housing Finance on Saturday said that there is a subdued demand for housing loans, particularly among the salaried individuals who are waiting to see if there are further rate cuts to be announced by the Reserve Bank of India this year.

The demand slowdown is despite a 100 basis points reduction in repo rate by the RBI so far in 2025.

The non-bank housing finance company, largest among its peers, recorded a loan book of ₹3,09,587 crore as of June 30, 2025, of which around 85 per cent was individual home loans. Within this, loan to salaried individuals is 75 per cent, while remaining 25 per cent is self employed. Loan disbursement of LIC Housing Finance during Q1 FY26 was ₹13,116 crore up 2 per cent from ₹12,915 crore in the corresponding quarter.

“We are in the middle of an interest rate cut cycle. When the RBI cut rates by 100 basis points, we were hoping for a big increase in demand. Unfortunately at least at LIC HFL, we have not seen that surge in demand. We think that many of the individual borrowers are waiting for the cycle to get completed and take the complete benefit of the rate cut,” said Tribhuwan Adhikari, managing director and CEO of LIC Housing Finance.

He told The Telegraph that the central bank could further lower the policy rate by another 50 basis points this financial year.

The slowdown in demand for housing loans is also reflected in the RBI data. In the first two months of the ongoing fiscal, the growth in housing loans was only 0.9 per cent compared to 2.5 per cent in the same period previous year.

For LIC Housing Finance, the total disbursement was ₹13,116 crore in Q1 FY26 against ₹12,915 crore in Q1 FY25, a growth of 2 per cent.

A slower pace of growth in housing credit disbursal was also flagged off by Bajaj Housing Finance in its Q1 FY26 earnings call. “The real estate market has been showing some moderation over the last 2-3 quarters,” said Atul Jain, MD, Bajaj Housing Finance.

Data from Knight Frank shows that residential real estate sales has declined by 2 per cent in the first six months of 2025 compared to the year-ago period.

Unsold inventories in the residential market have inched up by 4 per cent in the first half of 2025 compared to the year ago period.