India’s home-loan industry is experiencing a transformation driven by increasing digital adoption and a surge in demand from tier-2 and tier-3 cities, potentially reshaping the future of retail credit.
India’s home-loan market is being reshaped by two forces that once sat well outside the centre of the story: digital applications and demand from smaller cities. A new report from SGA PR says the industry is moving away from the old model of branch visits and paperwork, with borrowers increasingly starting the process online and lenders using technology to reach a wider pool of customers.
The report, titled “Housing Finance in India – The Silent Giant of Retail Credit”, says digital adoption has accelerated sharply in recent years. By 2024, about 92% of housing-finance applications were processed digitally, up from roughly 60% in 2020, while 42% of housing finance companies said most of their enquiries now arrive through digital channels. Even so, the report notes that housing loans are still not fully paperless because property checks, physical verification and other field work remain necessary.
The bigger shift is geographic. Tier-2 and tier-3 cities now account for about 64% of home-loan volumes, according to the report, and lending in those markets rose 81% year on year in 2025. Rising incomes, better infrastructure, new jobs and faster urbanisation are helping to drive demand, while higher property prices in major metros are pushing more buyers towards more affordable homes in smaller towns and cities. The Columns and The CSR Journal both highlighted the same figures, underscoring how central these markets have become to the next phase of housing-finance growth.
Technology is also changing how borrowers search for credit. Fintech platforms are increasingly linking customers with lenders, allowing users to check eligibility, compare products, submit documents and identify suitable financing options online. Rahul Jain, chief executive of SGA PR, said the opportunity now lies in expanding formal housing credit as demand spreads beyond the big cities.
SGA PR expects affordable housing, smaller-city demand and digital sourcing to remain the main growth areas, with digital sourcing potentially accounting for more than 70% of loans by 2030. It also sees artificial intelligence-based underwriting becoming more common. The broader message is that India’s next big housing-finance story may be written as much in smaller cities as in the metros, with technology helping lenders meet buyers faster and more efficiently.
Disclaimer: This article is intended to inform and educate, not to recommend or endorse any financial product, investment or strategy. Please consider your own financial circumstances and seek professional advice where appropriate before making financial decisions.
