Tier-2 and Tier-3 Cities Lead Home Loan Growth, Surpassing Metros in 2025

Home loan demand in India is increasingly shifting from metropolitan areas to Tier-2 and Tier-3 cities, which saw an 81% year-on-year growth in 2025, surpassing the 52% growth in Tier-1 cities. These smaller cities, including Chandigarh, Jaipur, Surat, Madurai, and Palwal, accounted for 64% of total home loan volumes, up from 60% in 2024. Factors such as improved infrastructure, expanding employment hubs, and mid-income housing availability are driving this trend, while premium borrowing remains concentrated in select metros like Mumbai and Gurugram.