Improved infrastructure connectivity, expanding employment hubs and a steady supply of mid-income housing are shifting homeownership demand away from core metro cities towards Tier-2 and Tier-3 markets such as Chandigarh, Jaipur, Surat, Madurai and Palwal. These cities recorded an 81% year-on-year growth in home loan volumes in 2025, outpacing the 52% growth seen in Tier-1 cities, according to a report by fintech-led mortgage distribution platform Urban Money.
The report said Tier-2 and Tier-3 markets accounted for 64% of total home loan volumes in 2025, up from 60% in 2024, pointing to a broader and more geographically distributed housing finance cycle. Strong borrower activity was seen in cities such as Chandigarh, Jaipur, Surat, Madurai and Palwal, reflecting deeper penetration of formal housing finance beyond India’s largest urban centres, it said.
While emerging cities are driving volume growth, premiumisation remains concentrated in select high-income markets. Mumbai, Gurugram and Hyderabad recorded close to 20% year-on-year growth in average loan ticket sizes, the report said.
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Large urban markets such as Delhi, Ahmedabad and Noida are increasingly reflecting volume-driven growth supported by stable affordability, rather than sharp premiumisation. Delhi and Ahmedabad recorded 61% and 44% year-on-year growth in home loan volumes, even as average loan ticket sizes rose by a measured 12%, indicating a broader base of end-user participation rather than concentration among higher-income borrowers, it said.
The current growth cycle is being driven by steady expansion in first-time and mid-income homeownership across a wider set of cities. While premium borrowing remains limited to a few high-income markets, the larger momentum is clearly affordability-led, supported by infrastructure development and rising aspirations beyond core city centres, the report noted.
Key urban markets show participation-led growth rather than premium skew
This pattern suggests rising entry of first-time and mid-income households into the housing market, supported by steady income-linked borrowing capacity and sustained supply across mid-priced segments. Noida mirrored a similar trend, with balanced growth across both loan volumes and ticket sizes, reinforcing its position as a structurally affordable extension market rather than a speculative or upgrader-led destination, the report said.
“India’s housing finance market is becoming more broad-based and structurally balanced. The current growth cycle is being driven by steady expansion in first-time and mid-income homeownership across a wider set of cities. While premium borrowing remains limited to a few high-income markets, the larger momentum is clearly affordability-led, supported by infrastructure development and rising aspirations beyond core city centres. This distributed demand base strengthens the long-term stability of the housing finance ecosystem,” Amit Prakash, co-founder and CBO at Urban Money.
Premiumisation remains concentrated in metros such as Mumbai and Gurugram
While emerging cities are driving volume growth, premiumisation continues to remain concentrated within a few high-income markets. Mumbai, Gurugram and Hyderabad recorded close to 20% year-on-year growth in average loan ticket sizes.
Hyderabad and Gurugram also posted strong growth in loan volumes, while Mumbai’s loan volumes remained largely stable, indicating value-led growth driven by affluent upgraders rather than broader borrower participation, the report said.
Peripheral and affordable corridors sustain demand momentum
Beyond core metros, affordability-led corridors and peripheral markets continue to play a critical role in sustaining housing demand.
Navi Mumbai recorded a 55% year-on-year increase in loan volumes, while the Noida–Greater Noida region registered 42% growth in total loan value, reflecting growing buyer preference for relatively accessible and infrastructure-supported micro-markets, the report said.
At the same time, mature housing markets such as Pune and Kolkata delivered steady and low-volatility growth, with loan volume increases of 9% and 5% respectively, alongside single-digit growth in average loan ticket sizes, lending balance to the overall housing finance cycle, the report said.