Homebuyers are increasingly borrowing not just to buy a house, but to keep up with rising property prices. While home loan rates remain competitive, with some public sector banks offering loans from 7.05%, residential prices across major cities have climbed sharply over the past few years, pushing average loan sizes higher and reshaping borrowing behaviour.
For borrowers, the equation is no longer just about finding the lowest interest rate. Processing charges, future rate resets, balance transfer options and loan flexibility can make a significant difference to the overall cost of a home loan over the next two or three decades.
Property prices across major metropolitan markets have risen sharply over the past few years, forcing homebuyers to borrow larger amounts to purchase similar-sized homes.
At the same time, rising household incomes, greater confidence in long-term earnings, and a growing preference for premium and larger residences have encouraged borrowers to stretch their budgets.
The broader housing finance data reflects this shift. Outstanding individual home loans in India have surged from Rs 9.98 lakh crore in 2015 to Rs 37.14 lakh crore in 2025, while the home loan-to-GDP ratio has increased from 8% to 11.23% during the same period, as per a report of the National Housing Bank (NHB). The steady rise suggests that housing credit is becoming an increasingly important driver of homeownership and real estate demand.
The latest data from the Reserve Bank of India (RBI) highlights the strength of the housing market. According to the central bank, the All India House Price Index (HPI) rose by 4.2% in the January-March quarter of FY26, up from 3.8% in the corresponding period a year earlier.
The acceleration in house price growth suggests that residential real estate demand remains resilient despite a period of relatively stable interest rates.
One of the most notable trends today is that loan values are rising faster than loan volumes in several premium housing markets. This suggests that property price appreciation is having a greater impact on borrowing behaviour than incremental demand alone.
Which cities have seen the fastest growth in loan sizes over the past 2–3 years?
Mumbai, Gurugram, and Hyderabad are the main urban centres where premium borrowing has caused a substantial increase in ticket sizes, according to data from the Urban Money Homebuyers Credit Pulse Report. The average loan ticket sizes in these cities increased by over 20% annually.
According to real estate reports from CRE Matrix, the average ticket size for primary housing sales reached about Rs 1.42 crore, indicating a clear consumer appetite for premium homes. This premium demand is largely supported by wealthy upgraders moving toward high-value properties.
Different micro-markets within these Tier-1 markets have different development tendencies. According to data compiled by the India Brand Equity Foundation (IBEF), the Mumbai Metropolitan Region (MMR) remains the region with the largest absolute loan sizes, averaging up to Rs 99 lakh.
What is the average home loan ticket size currently seen in major housing markets such as Delhi-NCR, Mumbai Metropolitan Region, Bengaluru and Hyderabad?
Overall, the Indian home loan market is in a sustained growth phase. Simranjeet Singh, CEO, SME and Retail Business, Anand Rathi Global Finance, says, in the last FY 25-26, it has grown by ~10-12% and is expected to grow on similar lines in this FY 26-27 as well.
“On similar lines, as the overall market grows, the key urban pockets, particularly Delhi-NCR, Mumbai Metropolitan Region, Bengaluru and Hyderabad have seen a huge surge in the average ticket size as compared to the national average of ~74lacs, with the Mumbai MMR market topping the chart at ~90-100lacs, closely followed by Delhi NCR at ~80-90lacs. Bengaluru & Hyderabad markets are on similar lines at ~70-80lacs. The surge is largely driven by a rise in premium housing demand coupled with rising property prices,” stated Simranjeet Singh.
Markets such as Mumbai Metropolitan Region (MMR), Delhi-NCR, Bengaluru, and Hyderabad continue to record average loan ticket sizes significantly above the national average. Over the last two to three years, Mumbai, Gurugram, and Hyderabad have witnessed some of the strongest growth in average loan sizes, with industry reports indicating annual growth of around 20% in certain micro-markets, according to Adhil Shetty, CEO, Bankbazaar.
Bengaluru has also seen robust growth, supported by continued hiring in the technology sector, GCC expansion, and rising residential property prices. While first-time homebuyers remain active, a growing share of demand is being driven by affluent upgraders and buyers opting for larger homes.
Among the top eight housing markets, which cities are witnessing the strongest demand for home loans in 2026? Are rising property prices pushing borrowers towards larger loan amounts and longer tenures?
Among the top eight housing markets, the strongest home-loan demand is currently concentrated in the large metros, including Delhi-NCR (especially Gurugram and Noida), Mumbai Metropolitan Region, Bengaluru, Hyderabad & Pune.
Yes, very clearly, the rising property prices are indeed pushing borrowers toward larger loans and longer tenures for affordability. Firstly, housing prices have risen sharply compared to the rise in income of buyers, reflecting a low pace of property price inflation.
To counter this, borrowers are taking larger loan amounts coupled with opting for 25–30 year tenures to lower the EMI burden to maintain manageable monthly cash flows.
For borrowers comparing lenders today, what should be the key considerations beyond the headline interest rate—such as processing fees, spread over benchmark rates, balance transfer options and service quality?
Customers should have a holistic approach to borrowing rather than just focusing on the interest rate part. The overall cost, repayment flexibility and service experience must be factored into the decision-making.
In terms of Spread over benchmark rates, the borrower must ensure to understand the lender’s spread over the benchmark, as a lower spread generally offers better transparency and ensures that any future rate cuts are passed on to the borrower.
Similarly, the borrower must compare the total upfront charges before making a decision, which comprises the total cost of the loan and not just processing fees. Processing fees, legal and technical charges, documentation fees, and other administrative costs will materially increase the eventual cost of the loan.
“A key factor to evaluate is the spread over the benchmark rate, as this determines how future changes in the interest rate cycle are transmitted to the borrower. Borrowers should also compare processing fees, legal and technical charges, insurance bundling practices, and other upfront costs, as these can materially affect the effective cost of borrowing. Balance transfer policies and refinancing options are equally important, particularly in a competitive market where switching lenders may generate meaningful savings over time,” said Adhil Shetty.
Equally important is the lender’s service quality, including speed of sanction and disbursal, transparency, responsiveness, and digital services for managing the loan.
With the RBI keeping the repo rate unchanged, what is the current home loan rate landscape across banks and HFCs? How competitive are rates compared to a year ago?
Today’s home loan market is no longer purely rate-driven. It is increasingly becoming a credit-profile-driven market where borrowers with strong credit scores, stable income, and lower leverage continue to command the most competitive pricing. It continues to remain highly competitive despite the RBI maintaining the repo rate at 5.25%.
Adhil Shetty, CEO, Bankbazaar, says, most public sector banks are currently offering home loans starting from around 7.05%–7.25% for eligible borrowers, while leading private sector banks typically start from around 7.50%–8.00%, depending on factors such as credit score, loan amount, occupation profile, and relationship with the lender.
“Among major lenders, Canara Bank offers rates starting from 7.05%, Bank of India and Bank of Maharashtra from 7.10%, while Bank of Baroda starts from 7.20%. Among private sector lenders, ICICI Bank offers home loans from around 7.50%, while HDFC Bank starts from approximately 7.75%,” Adhil Shetty added.
While rate cuts may have paused for now, competition among banks and housing finance companies remains intense, particularly for high-credit-quality borrowers.
For lenders, home loans remain a strategically important retail product that helps acquire long-term customer relationships, which helps keep pricing competitive despite rising property prices across major cities.
Disclaimer: The interest rates, loan ticket sizes, housing market data, and lender-specific offerings mentioned in this article are based on information available from public sources, industry reports, and expert inputs as of June 2026. Home loan interest rates are subject to change at the discretion of banks and housing finance companies (HFCs) and may vary depending on factors such as credit score, income profile, loan amount, occupation, property type, and lender policies. The examples, estimates, and market trends discussed are for informational purposes only and should not be construed as financial, investment, or lending advice. Readers are advised to independently verify the latest rates, fees, charges, and loan terms with the respective lenders before making any borrowing decision. Past trends in property prices and home loan demand may not necessarily indicate future market performance.
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