It estimated the total housing credit outstanding as of December 2013 at over Rs 8.6 trillion (Rs 8.6 lakh crore) as against Rs 7.5 trillion as of March 2013.
"With some HFCs focusing more on riskier products like loans against property and builder loans, and/or leaning more towards the self-employed segment where income streams can be more volatile some stress on their asset quality numbers is not unlikely," Icra said in a note.
However, it noted that so far HFCs have been able to maintain a healthy gross non performing assets ratio at 0.84 per cent.
Icra said the mortgage finance industry as a whole will deliver a stable performance going forward, saying it clipped at a healthy 18 per cent growth in assets during the first nine months of the outgoing fiscal.
Commenting on their profitability, Icra said HFCs witnessed a compression in their spreads because of a narrowing of yields.
"The yields have been largely impacted due to incremental growth coming from home loans at finer spreads, and lower disbursements to relatively higher yielding non-housing segments like builder loans," senior vice president Vibha Batra said.
An improvement in operating efficiencies of HFCs helped them protect profitability during the quarter, but Batra added that decline in net interest margins and some rise in credit provisions could lead to a 0.15-0.20 per cent reduction in their profitability this fiscal.