Housing loans spike 12% YoY fuelled by RBI rate cut cheer by 125 bps in 2025

Home Loans surge in 2025

• RBI cuts repo rate to 5.25%, boosting home loans and lowering lending rates.
• Home loans by under-30 borrowers rose to 16 percent, up from 9 percent in 2022
• Secured credit card issuance rose 62%, driven by first-time and young borrowers.

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The Reserve Bank of India (RBI) repo rate cut by 125 basis points from 6.5 percent to 5.25 percent in 2025 has indeed brought relief for home loan borrowers. According to the latest data by Paisabazaar, housing loans surged 12 percent year-on-year as of December this year.

The data revealed that 16 percent of the overall new home loans were driven by borrowers under the age of 30, representing a jump from 9 percent in 2022. The loan aggregator cited stable salaried income, dual-income households, and improved access to credit as reasons for the growth.

“Participation of under-30 borrowers in home loans has increased, reflecting an early entry into asset ownership,” said Santosh Agarwal, CEO of Paisabazaar.

Furthermore, the average home loan ticket size increased from Rs 29 lakh to approximately Rs 37 lakh in three years, driven by joint ownership accounting for 58 percent and the remaining by sole household ownership, the data indicated.

With the latest repo rate cut by the RBI by 25 bps to 5.25 percent on December 5, several leading banks have reduced lending rates on loans. For instance, Canara Bank has cut its lending rate by 25 bps from 8.25 percent to 8 percent. Similarly, Punjab National Bank reduced its lending rate from 8.35 percent to 8.10 percent.

How RBI rate cut helped home loan borrowers 

Hemant Kumar (name changed upon request) took a home loan of Rs 17 lakh from SBI for a tenure of 30 years on a floating rate of interest. The bank sanctioned the loan in March 2024 and started deducting the EMI of Rs 13,200 from April 2024 onwards.

Although the loan is at the tertiary stage, the illustration above shows that a large portion of every EMI goes towards the payment of the interest amount and the remaining to pay off the principal dues. Also, the interest amount fluctuates as the bank changes its lending rate in response to the RBI’s repo rate adjustment during the period.

For instance, more than 90 percent of the EMI paid from April 2024 to January 2025 went towards the payment of the interest amount. The RBI had kept the repo rate unchanged at 6.50 percent during the period.

However, as the RBI lowered its repo rate by 125 bps throughout 2025, the bank also reduced the interest rate on Baraily’s loan, with the lowest interest paid being in September and November 2025.

While the EMI amount will remain the same, the RBI’s reduced repo rate will significantly help Baraily to end the loan tenure earlier, as well as save on interest amount.

Personal loans surge, led by short-term borrowing

Meanwhile, personal loans grew 35 percent YoY in 2025. This growth was largely driven by short-term personal loans with smaller ticket sizes, which increased 77 percent YoY.

Salaried individuals accounted for approximately 70 percent of overall personal loan disbursals across categories.

“Borrowers increasingly used personal loans for short-term liquidity rather than long-term consumption,” the data noted. The top 10 metro cities contributed 34 percent of total personal loan disbursals, particularly led by Delhi and Mumbai.

Secured credit cards see uptick

Meanwhile, issuance of unsecured credit cards, which are distributed as per credit worthiness, saw a YoY decline of 21 percent in 2025. On the other hand, secured credit cards, wherein cash deposits act as collateral, recorded a strong growth of 62 percent.

“The trend shows a shift from consumption-led usage to structured credit building,” the data noted.

Interestingly, secured credit cards adoption was led by first-time borrowers. Of which, 34 percent of new card takers were under the age of 30. Delhi-NCR and Mumbai led the lending market, the data showed.

“Younger borrowers are entering the formal credit ecosystem, alongside a growing preference for secured and asset-backed products. The sharp growth in secured credit card adoption highlights a more structured approach to building credit history,” said Agarwal.