Mumbai: Mid-sized private banks are ceding ground in the home-loan market to larger public and private sector peers, as intense competition compresses yields and erodes their ability to price competitively. Axis Bank, Yes Bank, and Federal Bank saw their mortgage books register tepid growth or outright contraction year-on-year as of end-March 2026, even as the country's largest lenders continued to expand aggressively.State Bank of India grew its home loan book nearly 14% year-on-year, ICICI Bank expanded its mortgage portfolio by 13%, HDFC Bank grew its book by over 6%, and Kotak Mahindra Bank led the pack among private lenders with 18% growth.Larger banks are leveraging lower funding costs, sharper pricing, and stronger distribution networks to crowd out smaller peers in what has traditionally been a relationship-driven segment.Smaller banks, however, are finding the arithmetic difficult to justify. Axis Bank's home loan book grew just 4% year-on-year, Federal Bank's contracted 1.33%, and Yes Bank's shrank 1%. "Fifteen-year home loans are getting priced at 7.15% and deposits were going at higher rates than that last quarter," said KVS Manian, MD, Federal Bank.For the large banks, home loans are increasingly being viewed not just as a lending product but as a gateway to a deeper, long-term customer relationship. "From a mortgage book perspective, it is not just the book, but the kind of primary relationship that we are all focusing on and that is going to be a large, sustainable franchise over the long run," said Sashidhar Jagdishan, MD, HDFC Bank.ICICI Bank said recent acceleration in mortgage growth reflects a more settled rate environment.