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

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