Delhi
In 2025 India’s home-loan market experienced a significant geographical realignment as Tier-2/3 cities emerged as dominant contributors to mortgage demand. According to recent industry data, these smaller urban centres accounted for roughly 64 per cent of total home-loan volumes last year, up from around 60 per cent in 2024. This expansion was driven by an 81 per cent year-on-year increase in home loan volumes in Tier-2/3 markets, markedly higher than the 52 per cent growth seen in Tier-1 cities.
Several structural factors pertain to this broader growth trend. Affordability constraints in major metros have encouraged homebuyers to explore residential properties in emerging cities where prices remain more accessible and prop-fintech products are increasingly tailored to mid-income segments. Enhanced infrastructure connectivity, rising employment opportunities in smaller cities and the escalation of mid-tier housing projects have further increasingly supported demand.
For property seekers and investors alike, this shift signals a more distributed housing finance cycle in India. Smaller cities such as Chandigarh, Jaipur, Surat and Madurai have witnessed notable increases in loan creation, reflecting deeper penetration of formal credit channels. These dynamics present fresh opportunities for developers and real estate platforms focusing on non-metro growth corridors.
Tier 2 and Tier 3 cities now drive 64% of India’s total home loan volumes, with 81% YoY growth in 2025 compared to 52% in Tier 1 cities, showing that housing finance demand is shifting decisively beyond core metros.
Affordability pressures in major metros, along with better infrastructure, stronger job hubs and rising mid-income housing supply, are pushing first-time and aspirational buyers toward smaller cities and peripheral urban corridors.
Premiumisation remains concentrated in select metro markets, while cities like Delhi, Ahmedabad and Noida are seeing broader participation-led growth, indicating a more balanced and structurally distributed housing finance cycle across India.
