The methods for obtaining a mortgage loan have changed: if previously the process required numerous visits to banks, the completion of a large amount of paperwork, and long waiting times, the situation is now changing. More Indians are starting to apply for mortgages online, and small towns are also becoming key centers for housing demand.
According to a new report by SGA PR, small towns and digital lending can accelerate the next stage of development in the Indian housing finance market. The report, titled 'Housing Finance in India – The Silent Giant of Retail Credit,' details the transforming landscape of mortgage lending. It highlights how technology is changing the ways customers receive information about housing finance and apply for loans.
The pace of digital technology adoption in the housing finance sector has significantly increased in recent years. Data from the report shows that in 2024, about 92% of housing finance applications were processed digitally, compared to approximately 60% in 2020. Changes are also observed in how companies that issue loans are accessed: about 42% of housing finance providers reported that the majority of inquiries come through digital channels.
Despite this, the entire mortgage process is not yet fully digital. Compared to unsecured loans, housing finance still requires property verification, physical verification, and on-site work, so manual intervention remains an important element of the process.
However, a more significant point is where these mortgage loans originate. According to the report, second and third-tier cities account for about 64% of the total mortgage volume. In 2025, the volume of mortgage loans in these cities grew by 81% year-on-year. Several factors are behind this change: rising incomes, improved infrastructure, the emergence of new jobs, and accelerated urbanization are stimulating residents of small towns to purchase housing.
Another important reason is the continuous rise in real estate prices in major metropolitan areas. While housing prices in primary cities remain high, buyers in small towns and villages can find relatively affordable housing.
Technology is also opening up new opportunities in mortgage distribution. Fintech platforms connect clients who wish to take out loans through digital channels with lending companies. Through these platforms, clients can check their creditworthiness, compare different options, fill out documents, and find lending institutions that meet their needs.
Rahul Jain, CEO of SGA PR, noted that the current opportunity lies in bringing formal housing finance to as many people as possible, especially considering that housing demand is extending beyond megacities and reaching small towns.
The report indicates that affordable housing, demand from small towns, and digital search may remain key areas of growth in the future. By 2030, the share of digital search could exceed 70%, and the use of AI-based underwriting in the loan issuance process will also become more common. Thus, the next major growth story in the Indian housing finance market will not be limited only to large cities; in the future, small towns and villages may become important centers of this development, and technology will help lending companies reach customers faster and more efficiently.