72 Per Cent Homebuyers Under 40 Prefer Applying For Loans Online: BASIC Home Loan Report

Digital platforms are playing an important role in shaping how younger homebuyers apply for housing loans, with a majority choosing online channels over traditional ones. According to a consumer insights report by BASIC Home Loan titled How Bharat Finances Its Housing Dreams, 72 per cent of borrowers below the age of 40 are keen to apply for home loans online rather than offline means.

The report has emphasised the role that an expanding digital infrastructure and internet access are having on borrowing behaviour, especially amongst younger homebuyers who are more comfortable completing financial processes online.

Digital Loan Applications Appeal to Younger Borrowers

The BASIC Home Loan report has found that 72 per cent of borrowers below the age of 40 have preferred applying for home loans online. The trend has been driven by convenience, faster processing, and the ability to compare lenders digitally.

Among borrowers who have opted for online platforms, 38 per cent have cited faster processing as the major reason, while 32 per cent have stated that they appreciate the broader range of loan options available for comparison online.

The report has also highlighted an increase in digital adoption across age groups. Nearly 80 per cent of the borrowers who have availed of DigiLocker during the loan application process are aged 35 years or less. At the same time, the digital adoption has spread to borrowers beyond the younger age category, with 47 per cent of senior citizens aged 60 and above indicating comfort in digital loan processing.

Expanding Internet Access Supporting Digital Adoption

The move to online loan applications has also been backed by the increasing penetration of the internet. According to the report, there are about 886 million active internet users in the country in the year 2024.

Rural internet users have exceeded 488 million compared to 398 million urban internet users. The report has observed that the scope of digital connectivity has facilitated borrowers from small towns and rural areas to access housing finance services online.

This expansion of internet access has enabled an increase in the number of borrowers who are able to explore digital loan applications, complete documentation and track applications for approval through online platforms.

Housing Finance Market On The Rise

The report has shown great growth in the housing finance sector. Individual housing loans have also increased by 14 per cent on a year-on-year basis to Rs 33.53 lakh crore in the second quarter of FY24.

Despite this growth, the mortgage market is still small compared to many economies around the world. The report has laid down that the mortgage to GDP ratio is currently only 12 per cent and indicates that there is a huge scope for expansion.

The housing finance market is expected to continue growing steadily over the next few years. According to the report, the sector is projected to reach a valuation of about $329.9 billion, backed by a compound annual growth rate of 8.9 per cent through 2033.

Middle-Income Borrowers Are The Key Drivers Of Loan Uptake

The middle-income segment has seen the highest loan uptake across the income segment. Around 74 per cent of those earning between Rs 11 lakh and Rs 20 lakh a year have availed home loans, the highest in the income bracket.

In contrast, borrowers from lower-income groups still struggle to obtain access to housing finance. Only 56 per cent of people who earn less than Rs 5 lakh in a year have been able to get home loans, mostly because of the increased documentation and eligibility criteria.

The report has also pointed out that borrowers in higher income groups are becoming more comfortable in taking larger loans. Many prospective buyers in these areas are now willing to spend up to 40 per cent of their monthly income on home loan EMIs.

Lending Institutions And Market Share

The housing finance market continues to be dominated by banks, although non-banking lenders have also increased their presence. Public sector banks hold the largest share of the market at 44 per cent.

Private sector banks have a market share of about 36 per cent, and non-banking financial companies (NBFCs) have seen a strong growth in the past few years. According to the report, there has been 18.5 per cent growth in NBFC credit in FY24.

The competition among lenders has led to an increased product choice and broader loan availability for borrowers.

Documentation And Approval Delays Continue as Key Challenges

Despite the growing trend of going digital, borrowers are still faced with some challenges throughout the home loan process. Documentation requirements are the most reported issue.

In addition to the paperwork requirements, 17 per cent of borrowers have stated that long approval timelines continue to be a major hurdle when applying for housing loans.

Interest rate changes also affect the demand for borrowing. The report has observed that repo rate changes have a direct impact on the affordability of home loans. For example, cumulative repo rate cuts in 2025 took the rate from 6.50 per cent to 5.25 per cent, which made housing loans more affordable for borrowers.

Digital Platforms Becoming Centrepiece Of Housing Finance

The BASIC Home Loan report has concluded that digital platforms are playing an increasingly important role in access to housing finance. With 72 per cent of borrowers below the age of 40 already preferring online loan applications, digital channels have become an important component of the lending ecosystem.

At the same time, the report has highlighted that there remain challenges such as documentation requirements and delays in the approval process, which are still faced by borrowers, pointing to the need for further improvement in the loan application process.