Housing finance companies (HFCs) are facing significant pressure due to aggressive pricing of mortgage rates by public sector banks, with the rate war squeezing their margins. Despite reporting growth in loan disbursals, many HFCs are not seeing a proportional increase in their assets under management (AUM), largely because several borrowers are shifting their home loans to competitors. In the June 2025 quarter, Bajaj Housing Finance saw a 0.5% decline in net profit, while Aadhar Housing Finance and LIC Housing Finance reported 10% and 5% growth, respectively. Lower lending rates following the Reserve Bank of India's 100 basis points repo rate cut this year have brought down their net interest margins. Bajaj Housing Finance currently charges one of the lowest mortgage rates at 7.35%, according to its website. In comparison, public sector lender Canara Bank interest rate on home loans starts at 7.40%. The rate war is affecting even the largest housing finance company, LIC Housing Finance. Jain highlighted the disparity between disbursement and AUM growth amid pricing pressures. Bajaj Housing Finance reported a 22% increase in disbursements to ?14,651 crore in the first quarter. However, its AUM rose only 0.6% to ?5,736 crore from ?5,701 crore. This is because of very intense competition. 
 

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