In financial year 2023, banks in India advanced over 2.5 trillion Indian rupees in housing loans crossing pre-COVID levels. This reflected renewed homebuyer sentiment, as an increasing number of Indians were investing in buying residential property.

Growth of home loans market

Forty years ago, home loans were an alien concept. People would direct their provident fund savings and retirement benefits toward buying a home. However, three key institutions: HDFC, ICICI Ltd, and the State bank of India with their new lending concepts led to significant changes in the home loan market. Currently different commercial banks, NBFCs, and housing finance companies have flooded the mortgage market, and giving prospective home buyers from diverse strata of society with bargaining power and a chance at affording a home.

Inflation and home loans 

India is not untouched by global inflation. To address the problem, the Reserve Bank of India hiked the repo rate four times since April 2022 to 5.9 percent. Consequently, leading banks and housing finance companies raised their lending rates. For a prospective homebuyer, this meant a rise in tenure for home loans. In other words, equivalent monthly payments (EMIs)for homebuyers have lengthened and become more expensive. In financial year 2022, banks in India advanced around two trillion Indian rupees in housing loans almost reaching pre-COVID levels.

The Indian home loan market exhibits robust growth potential, fueled by a burgeoning middle class, increasing urbanization, and government initiatives promoting affordable housing. The market, valued at approximately ₹XX million in 2025 (assuming a logical extrapolation based on the provided CAGR of 22.50% from a past period), is projected to experience significant expansion throughout the forecast period (2025-2033). Key drivers include favorable interest rates (although fluctuations in floating rates pose a risk), government schemes aimed at boosting homeownership, and a rising preference for owning property over renting, particularly among salaried professionals. The market is segmented by customer type (salaried and self-employed), lending source (banks and HFCs), interest rate type (fixed and floating), and loan tenure (categorized into various ranges). While the dominance of established players like HDFC, LIC Housing Finance, and Indiabulls Housing Finance is evident, the market also presents opportunities for smaller players and fintech companies leveraging technology to improve accessibility and efficiency. Constraints include fluctuating interest rates impacting affordability, stringent lending norms, and regional disparities in property prices and infrastructure development. The growth trajectory is expected to be influenced by economic conditions, regulatory changes, and the availability of credit. The segment analysis reveals a significant portion of the market is driven by salaried individuals seeking fixed-rate home loans with tenures between 11-24 years. However, the self-employed segment and floating-rate loans are also demonstrating significant growth, reflecting the diverse needs of the Indian homebuyer. The competitive landscape is dynamic, with both large established players and newer entrants vying for market share. The future will likely see increased competition, a focus on digitalization and customer experience, and the emergence of innovative financial products tailored to specific segments within the Indian home loan market. Recent developments include: June 2023: In a major development, HDFC (Housing Development Finance Corporation) and HDFC Bank came into a merger on July 1, paving the way for the country's largest corporate merger. Following this, HDFC shares were delisted on July 13 and amalgamated into HDFC Bank., May 2023: LIC Housing Finance (LIC HF) is expected to expand its branches in new geographies, increase focus on high-yielding loan against property (LAP), and intensify recovery efforts as it consolidates its position as the largest housing finance company after the merger of larger rival Housing Development Finance Corp with its banking arm.. Key drivers for this market are: Growing Urbanization, Low-Interest Rates. Potential restraints include: Growing Urbanization, Low-Interest Rates. Notable trends are: Lower Interest Rates is Expected to Drive the Market.

In financial year 2019, market share of loans deployed by banks made up for 57 percent of the home loan market in India. Whereas, the market share of the non-bank lender, Housing Finance Companies in home loans sector were about 43 percent of the total market in the country.

The India Home Mortgage Finance Market Report is Segmented by Source (Housing Finance Companies (HFCs) and Banks), by Interest Rate (Fixed Rate and Floating Rate), and by Tenure (Up To 5 Years, 6 - 10 Years, 11 - 24 Years, and 25 - 30 Years). The Report Offers Market Size and Forecasts for India Home Mortgage Finance Market in Value (USD Million) for all the Above Segments.

In 2023, housing loans accounted for 12.3 percent of India's GDP and are projected to increase to 13 percent by 2025. Over the past six years, the home loan portfolio has experienced significant growth due to increased disbursements fueled by the rising demand from tier-2 and tier-3 cities, increased nuclear families, and growing disposable income.

As of March 2024, Housing and Urban Development Corporation Ltd. (HUDCO) was the leading housing finance company in India with a market capitalization (at BSE) of 354 bllion Indian rupees. LIC Housing Finance and IDFC followed with a market capitalization of around 313 billion and 173 billion Indian rupees respectively.

In the financial year 2023, public sector banks in India disbursed individual housing loans amounting to 3.22 trillion Indian rupees. Following closely housing finance companies disbursed housing loans worth 3.11 trillion Indian rupees. This was a growth of 19 percent in comparison to the last financial year.

The Asia-Pacific Mortgage/Loans Broker Market is Segmented by the Enterprise (large, Small, and Medium-Sized), Application (home Loans, Commercial and Industrial Loans, Vehicle Loans, Loans To Governments, and Others), End-User (businesses and Individuals), and Country (Australia, Bangladesh, China, India, Indonesia, Japan, Pakistan, Philippines, Thailand, and Vietnam). The Market Sizes and Forecasts Regarding Value (USD) for all the Above Segments are Provided.

In the year 2022, lending interest rate in India stood at 8.6 percent. This was a slight reduction from last year's rate of 8.6 percent. Lending rate refers to the bank rate that generally caters to the short- and medium- term financing needs of the private sector.

The Data shows the major sector level deployment of bank credit collected from 40 select scheduled commercial banks, accounting for about 93 per cent of the total non-food credit deployed by all scheduled commercial banks.

Note: 1. Data for the period April 2007 - December 2018 is in the Old Format and the data for January 2019 - September 2022 is in the New Format. 2. For Old Format a. Data are provisional and relate to select 41 scheduled commercial banks. From September 2017, data account for 90 per cent of total non-food credit extended by all scheduled commercial banks. b. Export credit under priority sector relates to foreign banks only. c. Micro and small under industry include credit to micro and small industries in manufacturing sector. d. Micro and small enterprises under Priority Sector include credit to micro and small enterprises in manufacturing as well as services sector. e. Priority Sector is as per the old definition and does not conform to FIDD Circular FIDD.CO.Plan.BC.54/04.09.01/2014-15 dated April 23, 2015. f. A sharp adjustment of Rs.17300 Crore in consumer durables credit in August 2018 was due to rectification of an error, as one bank had previously wrongly classified housing loans as consumer durable loans.

1. For New Format a. Data are provisional. Non-food credit data are based on Section - 42 return, which covers all scheduled commercial banks (SCBs), while sectoral non-food credit data are based on sector-wise and industry-wise bank credit (SIBC) return, which covers select banks accounting for about 93 per cent of total non-food credit extended by all SCBs. b. With effect from January 2021, sectoral credit data are based on a revised format due to which values and growth rates of some of the existing components published earlier have undergone some changes. c. Non-food credit given for the periods December 18, 2020 and December 20, 2019 pertains to the periods January 1, 2021 and January 3, 2020 respectively. d. Credit data are adjusted for past reporting errors by select SCBs from December 2021 onwards. e. Micro and Small include credit to micro and small industries in the manufacturing sector. f. NBFCs include HFCs, PFIs, Microfinance Institutions (MFIs), NBFCs engaged in gold loans and others. g. Other Services include Mutual Funds (MFs), Banking and Finance other than NBFCs and MFs and other services which are not indicated elsewhere under services. h. Agriculture and Allied Activities also include priority sector lending certificates (PSLCs). i. Micro and Small Enterprises include credit to micro and small enterprises in manufacturing and services sectors and also include PSLCs. j. Medium Enterprises include credit to medium enterprises in the manufacturing and services sector.

Key information about India Total Loans

• India Total Loans was reported at 2,048.209 USD bn in Dec 2024
• This records an increase from the previous number of 2,037.410 USD bn for Sep 2024
• India Total Loans data is updated quarterly, averaging 898.708 USD bn from Dec 1998 to Dec 2024, with 105 observations
• The data reached an all-time high of 2,048.209 USD bn in Dec 2024 and a record low of 82.701 USD bn in Dec 1998
• India Total Loans data remains active status in CEIC and is reported by CEIC Data
• The data is categorized under World Trend Plus’s Global Economic Monitor – Table: Total Loans: USD: Quarterly

In 2022, housing loans ranging from 2.5 to 5 million accounted for approximately 31 percent of total housing loans in India. In contrast, loans below 0.75 million constituted only 5 percent of the total. Overall, housing loans accounted for 11.7 percent of India's GDP in 2022.

Key information about India Non Performing Loans Ratio

• India Non Performing Loans Ratio stood at 2.8 % in Mar 2024, compared with the ratio of 3.9 % in the previous year
• India Non Performing Loans Ratio data is updated yearly, available from Mar 1998 to Mar 2024
• The data reached an all-time high of 14.7 % in Mar 1999 and a record low of 2.3 % in Mar 2011

• In the latest reports, Money Supply M2 in India increased 8.6 % YoY in Sep 2024
• India Foreign Exchange Reserves was measured at 589.8 USD bn in Oct 2024
• The Foreign Exchange Reserves equaled 9.2 Months of Import in May 2023
• The country's Domestic Credit reached 3,162.1 USD bn in Oct 2024, representing an increased of 10.9 % YoY
• Household Debt of India reached 617.3 USD bn in Mar 2024, accounting for 17.4 % of the country's Nominal GDP

In financial year 2024, Indian banks had deployed over 53 trillion Indian rupees to the retail loans sector. This was an increase by around 20 percent compared to the previous year. The lion's share of credits went to the home loans segment with over 27 trillion Indian rupees. Other segments with a credit value of more than two trillion Indian rupees were auto loans as well as credit card receivables.

In the financial year 2023, home loans dominated the retail loan market in India by portfolio outstanding or value with a share of 40.7 percent, followed by personal loans with over 14 percent. Consumer-durable loans had the lowest portfolio outstanding or value in the retail loan category. Retail loans are loans given to individual consumers for various reasons such as purchase of property, vehicles, consumer durables, funding education etc.

In 2022, non-banking financial companies in India dominated the retail loans market in terms of the number of loans, with 53 percent market share. Private sector banks followed with around 21 percent. Retail loans are loans given to individual consumers for various reasons such as purchase of property, vehicles, consumer durables, funding education etc.

As of June2023, personal loans dominated the retail loans market in India by the count of active loans with a share of 20.8 percent. The segment was followed by credit card with around 18.5 percent. Auto loans ranked the lowest in terms of volume. Retail loans are loans given to individual consumers for various reasons such as purchase of property, vehicles, consumer durables, funding education etc.

Global Home Elevator Market size was USD 9.85 billion in 2022 and is grow to USD 14.58 billion by 2030 with a CAGR of 5.03%.

In the financial year 2021, the bank credit growth of loans against property to micro, small, and medium enterprises (MSMEs) was eight percent, a sharp decline from the previous year. LAP MSMEs or loans against property for MSMEs is a loan disbursed by a financial institution against the mortgage of a property.

In fiscal year 2023, HDFC reported outstanding gross loans worth over 88 billion U.S. dollars. This follows the trend of the three previous years with an increasing value of outstanding loans. The Housing Development Finance Corporation (HDFC) is India's first specialized mortgage company in India founded in 1977.