The home loan process is evolving significantly, as more borrowers are beginning their applications online, a stark contrast to the previous norm of physically visiting bank branches. This transition is indicative of broader changes within India’s housing finance sector, highlighting the role of digital solutions in the industry. Recent findings from SGA PR reveal that digitisation is transforming how individuals secure housing loans.

According to the report, titled ‘Housing Finance in India – The Silent Giant of Retail Credit’, a remarkable shift has occurred in the home-loan application process, with around 92 per cent of housing-finance applications being processed digitally in 2024, up from approximately 60 per cent in 2020. This digital adoption reflects a growing trend where more enquiries are made via online channels, indicating a pivotal change in consumer behaviour in seeking housing finance.

Nonetheless, the process of obtaining home loans remains partly manual since it involves essential steps like property verification and physical checks, which are crucial in the real estate sector. Lenders still conduct field-level assessments to ensure the validity and authenticity of property documents.

Surge In Demand From Smaller Cities

The report further highlights that Tier 2 and Tier 3 cities are becoming pivotal markets for home loans, accounting for around 64 per cent of the total housing finance volume. These regions witnessed an impressive year-on-year growth rate of 81 per cent in 2025. Several factors contribute to this emerging trend, including rising income levels, improvements in infrastructure, and an increase in employment opportunities, which collectively encourage home ownership in these towns.

Affordability is another significant driving force behind the growth in smaller cities. With property prices in major metropolitan areas remaining elevated, individuals in Tier 2 and Tier 3 towns have the opportunity to invest in more affordable housing. This affordability gap is reshaping market dynamics, pushing home seekers towards these less populous regions.

Additionally, urbanisation is contributing to the growing demand for houses in these smaller towns, as more individuals seek to relocate for better living conditions and opportunities. The influx of new residents is expected to stimulate further development and civic amenities, solidifying the role of smaller cities in India’s housing market.

Role Of Fintech In Mortgage Distribution

Fintech companies are playing a crucial role in reshaping how borrowers access home loans. These platforms facilitate connections between potential borrowers and lending institutions through comprehensive digital experiences. By enabling users to assess their eligibility, compare various loan products, and complete necessary documentation online, fintechs are enhancing convenience and efficiency in the borrowing process.

According to Rahul Jain, CEO of SGA PR, the focus now lies in expanding access to formal housing credit, especially as the demand shifts from metropolitan areas to smaller cities. As the housing finance landscape evolves, it is anticipated that affordable housing and digital sourcing mechanisms will continue to be significant contributors to market growth.

The report forecasts that by 2030, digital sourcing of home loans could surpass 70 per cent, while the adoption of AI-driven underwriting processes is set to become more common. This evolution suggests that smaller towns could emerge as influential players in the housing finance market, driven by technological advancements that enable lenders to reach a broader pool of borrowers more swiftly and efficiently.

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