The landscape of home loans in India is experiencing a significant transformation, marked by a generational shift as younger individuals enter the property market earlier than previous generations. A recent survey conducted by BASIC Home Loan indicates that the average age of home loan applicants has dropped to 25, a notable decline from the age of 35 observed just a few years ago. This trend signifies that Generation Z, born between 1997 and 2012, is increasingly influencing home-buying decisions, alongside Millennials, who were born from 1981 to 1996. Together, these two demographics are now responsible for approximately 90-95% of residential property acquisitions, reflecting a notable change in market dynamics.
Contributing to this shift is the growing comfort with digital technology among younger borrowers. The survey highlights that around 72% of applicants under the age of 40 prefer to apply for loans online. This inclination towards digital processes is not limited to younger generations, as there is a rising acceptance among senior citizens as well; nearly 47% of borrowers over the age of 60 have expressed ease in utilizing online platforms for loan applications. Atul Monga, CEO and co-founder of BASIC Home Loan, emphasizes the transformation within the Indian housing finance sector, which has evolved from a fragmented and high-interest rate environment to a more accessible and dynamic element of the financial system.
The data also supports the notion of a burgeoning home loan market, which stood at $329.9 billion in 2024 and is projected to grow at a compound annual growth rate (CAGR) of 8.9% from 2025 to 2033. According to the National Housing Bank, individual housing credit has seen a year-on-year increase of 14%, reaching Rs 33.53 lakh crore in the second quarter of FY24. Public sector banks dominate this space, holding over 44% of outstanding individual housing loans, while private lenders are rapidly increasing their market share to 36% through enhanced digital offerings and expedited processing. Non-banking financial companies are also making significant inroads, particularly among borrowers over 40, who appreciate more flexible lending options and quicker loan disbursals.
Despite the positive momentum, potential borrowers still encounter challenges in the home loan process. The survey revealed that 44% of respondents identified cumbersome documentation as a major obstacle, while 32% reported issues with mis-selling by agents. Additionally, 17% indicated that prolonged approval timelines hinder their ability to secure loans promptly. These insights, derived from over 7,400 current and prospective homebuyers across Tier-2 and Tier-3 cities, highlight the impact of improved access to finance and evolving consumer expectations in drawing a larger demographic into the formal housing finance sector. As the market continues to adapt, the role of younger generations in shaping the future of home financing will undoubtedly be pivotal.