As of March 2025, ICICI Bank provided the lowest interest rates for its home loans in India, with an average of 8.75 percent. Bank of Maharashtra accounted for the highest interest rate with an average of 9.75 percent.

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 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 2021, the effective interest rate on home loans was a little over three percent on average. This was a slight increase compared to the previous year, when the interest rate stood at 2.9 percent. This increase happened after years of decreasing interest rates.

The reasons for this decline over the last decade are the general decrease in the nominal interest rate as well as the introduction of governmental subsidy programs such as the Credit Linked Subsidy Scheme (CLSS). In general, home loans in 2020 were more affordable than in 2000.

The benchmark interest rate in India was last recorded at 6.25 percent. This dataset provides - India Interest Rate - actual values, historical data, forecast, chart, statistics, economic calendar and news.

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 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.

Key information about India Long Term Interest Rate

• India Government Securities Yield: 10 Years was reported at 6.71 % pa in Jan 2025, compared with 6.78 % pa in the previous month.
• India Long Term Interest Rate data is updated monthly, available from May 1996 to Jan 2025.
• The data reached an all-time high of 13.96 % pa in May 1996 and a record low of 5.11 % pa in Oct 2003.
• Long Term Interest Rate is reported by reported by Reserve Bank of India.

• In the latest reports, India Short Term Interest Rate: Month End: India: MIBOR: 3 Months was reported at 7.19 % pa in Jun 2023.
• The cash rate (Policy Rate: Month End: Repo Rate) was set at 6.50 % pa in Jan 2025.
• India Exchange Rate against USD averaged 82.23 (USD/INR) in Jun 2023.

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Personal Loans Market Size 2025-2029

The personal loans market size is forecast to increase by USD 803.4 billion, at a CAGR of 15.2% between 2024 and 2029.

The market is witnessing significant growth, driven by the adoption of advanced technologies in loan processing and the rise in the use of cloud-based personal loan servicing software offerings. These technological advancements enable faster loan processing, improved customer experience, and enhanced security. However, the market faces challenges related to regulatory compliance, with increasing regulations and scrutiny from regulatory bodies. Lenders must ensure they adhere to these regulations to maintain trust and transparency with their customers. Digitalization, including cloud computing, chatbots, big data analytics, and artificial intelligence, has transformed the market. Additionally, the market is witnessing an increase in competition, with new players entering the market and existing players offering innovative products to attract customers. Overall, the market is expected to continue its growth trajectory, driven by technological advancements and the need for flexible financing solutions.

What will be the Size of the Personal Loans Market During the Forecast Period?

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The market encompasses short-term financing solutions designed for individuals to meet their various financial needs. Employment status and credit history significantly influence borrowing limits and interest rates in this sector. Traditional balance sheet lending institutions, such as credit unions, have long dominated the market, but online loan providers have gained traction due to quick lending processes and digitalized business operations. Interest rates and borrowing limits continue to be key market drivers, with competitive insights from credit unions and online providers shaping the landscape. Employment instability and economic uncertainty have increased demand for personal loans, particularly among those with less-than-ideal credit histories.
Digitalization, including cloud computing, chatbots, big data analytics, and artificial intelligence, have transformed the market. These technologies streamline loan assessments, enabling faster approval processes and more personalized customer experiences. However, the rise of digital credit platforms also presents challenges, such as increased competition, potential bad debts, and penalties for late payments. Collateral is less common in personal loans compared to other types of loans, but awareness of digitalization and automation continues to grow. Credit cards serve as a competitive alternative for some consumers, but personal loans offer more flexibility and potentially lower interest rates for larger borrowing needs.

How is this Personal Loans Industry segmented and which is the largest segment?

The personal loans industry research report provides comprehensive data (region-wise segment analysis), with forecasts and estimates in 'USD billion' for the period 2025-2029, as well as historical data from 2019-2023 for the following segments.

Application

  Short term loans
  Medium term loans
  Long term loans


Type

  P2P marketplace lending
  Balance sheet lending


Channel

  Banks
  Credit union
  Online lenders


Geography

  North America

    Canada
    US


  Europe

    Germany
    UK
    France
    Italy


  APAC

    China
    India
    Japan


  South America

    Brazil


  Middle East and Africa

By Application Insights

The short term loans segment is estimated to witness significant growth during the forecast period.

Personal loans have gained popularity as a flexible financing solution for individuals, particularly In the form of short-term loans. These loans cater to urgent needs, such as medical emergencies or car repairs, offering quick access to funds with shorter repayment periods, typically within a year. Unlike home or gold loans, personal loans do not require collateral, making them an accessible option for borrowers. Employment status, credit history, and borrowing limits are key factors in determining eligibility and loan amounts. The market is undergoing digital transformation, with cloud computing, chatbots, big data analytics, and artificial intelligence streamlining business operations. Fintech companies and online loan providers are disrupting traditional financial institutions, such as banks and credit unions, by offering instantaneous loan approvals and digital credit platforms.

However, challenges persist, including regulatory compliance, competition, and managing bad debts and penalties. In the competitive environment, Zopa, Startups, and other fintech companies are leveraging automation, AI technology, and credit history assessments to provide personalized loan solutions. Economic uncertainty and the increasing use of the Internet of Things have heightened aware

List of RBI Registered Loan Apps in India with details on loan amount limits and interest rates.

With average lending interest rates of less than three percent in 2023, Switzerland was the country with the lowest cost of borrowing money among the ones selected here. The average lending interest rate in China was 4.35 percent, and in South Korea it was roughly 5.2 percent. The average interest rate in the United States was 3.25 in 2021, the latest available data, but the prime rate charged by banks in that country has increased since then.

This dataset provides values for BANK LENDING RATE reported in several countries. The data includes current values, previous releases, historical highs and record lows, release frequency, reported unit and currency.

In January 2025, global inflation rates and central bank interest rates showed significant variation across major economies. Most economies initiated interest rate cuts from mid-2024 due to declining inflationary pressures. The U.S., UK, and EU central banks followed a consistent pattern of regular rate reductions throughout late 2024. In early 2025, Russia maintained the highest interest rate at 21 percent, while Japan retained the lowest at 0.5 percent. Varied inflation rates across major economies The inflation landscape varies considerably among major economies. China had the lowest inflation rate at 0.5 percent in January 2025. In contrast, Russia maintained a high inflation rate of 9.9 percent. These figures align with broader trends observed in early 2025, where China had the lowest inflation rate among major developed and emerging economies, while Russia's rate remained the highest. Central bank responses and economic indicators Central banks globally implemented aggressive rate hikes throughout 2022-23 to combat inflation. The European Central Bank exemplified this trend, raising rates from 0 percent in January 2022 to 4.5 percent by September 2023. A coordinated shift among major central banks began in mid-2024, with the ECB, Bank of England, and Federal Reserve initiating rate cuts, with forecasts suggesting further cuts through 2025 and 2026.

In financial year 2024, the value of gross non-performing assets (NPA) at HDFC Bank Limited across India amounted to 311 billion Indian rupees. This was a significant increase in the NPAs filed by the bank compared to the previous year when it amounted to around 180 billion rupees. Countrywide, the Industrial Development Bank of India (IDBI) had the highest non-performing asset value across all private commercial banks in 2021, followed by the Industrial Credit and Investment Corporation of India Bank (ICICI bank). In total, the gross non-performing asset value of Indian private banks amounted for over two trillion Indian rupees that year.

Why are NPAs also called “bad assets”?

Non-performing assets are advances or loans on which the debtor missed to settle principal or interest payments to the bank or is going to pay late. These assets then must be recorded on a bank’s balance sheet. NPAs reduce the cash flow of the lender and can, therefore, become a significant weight for a bank. After reaching a height in financial year 2018, the NPA-ratio decreased in the following years. Due to the economic crisis caused by the coronavirus (COVID-19) pandemic, estimations by the Reserve Bank of India predict a strong increase of non-performing assets in the course of 2021. One bank that already got in trouble because of its high share of NPAs was the Yes Bank. On behalf of the Reserve Bank of India it was rescued by the State Bank of India, HDFC Bank, and other banks in April 2020.

India’s largest private bank

Mumbai-based HDFC Bank is India’s largest private bank in terms of total assets. It was founded in 1994 as a subsidiary of the Housing Development Finance Corporation and was one of the first new private banks after the market liberalizations starting in 1991. The bank’s network comprises nearly 5,500 branch offices and nearly 15,000 ATMs across India. Other subsidiaries of the HDFC Group are the housing finance company GRUH or the general insurer HDFC ERGO.