Home Loan Growth Shifts to Tier-2, 3 Cities, Outpacing Metros: Report

• Tier 2 and 3 cities saw 81% year-on-year home loan volume growth in 2025, significantly higher than Tier-1 cities' 52%.
• These emerging markets now account for 64% of home loan volumes, up from 60% a year prior.
• Improved infrastructure, employment hubs, and mid-income housing availability are driving demand in smaller cities.
• Chandigarh, Jaipur, Surat, Madurai, and Palwal showed strong borrower activity and increased loan creation.
• Premiumisation is concentrated in high-income markets like Mumbai, Gurugram, and Hyderabad, with stable volumes in Mumbai.

Why It Matters: Home loan demand is rapidly expanding beyond metros, with Tier 2 and 3 cities becoming key growth drivers.