Millennials and Gen Z are rewriting India’s housing story, accounting for nearly 90–95% of home purchases and driving a rapid shift toward digital-first home loan journeys, according to a new consumer insights report by BASIC Home Loan.

The study, based on a survey of over 7,400 existing and aspiring homebuyers across India — particularly Tier-2 and Tier-3 markets — highlights how digital infrastructure, expanding financial access, and evolving borrower expectations are reshaping the country’s housing finance ecosystem. With nearly 72% of borrowers under 40 preferring to apply online, the report underscores a decisive generational shift powering Bharat’s march toward inclusive homeownership.

Digital home loan process takes centre stage

A central theme is the rapid mainstreaming of digital home loan journeys. While younger borrowers continue to lead adoption, older borrowers, particularly those above 60, are increasingly embracing digital channels, with nearly 47% of borrowers now comfortable applying for loans online.

The adoption of IndiaStack has played a pivotal role in transforming the home loan ecosystem, enabling Millennials and Gen Z to transition toward digital-first processes. Survey findings show nearly 80% of DigiLocker users in the home loan process are aged 35 or below. This highlights the growing preference for seamless, paperless applications over traditional, document-heavy processes.

Atul Monga, CEO & Co‑Founder, BASIC Home Loan, said, “Millennials and Gen Z are at the heart of India’s housing story, and their preference for fast, transparent digital loan journeys is reshaping the ecosystem. By reducing documentation friction, leveraging IndiaStack and respecting the borrower’s time, we can expand inclusion and unlock housing demand across Bharat, from metros to Tier-3 towns. This is essential to achieving truly inclusive homeownership at scale.”

Public Sector Banks continue to dominate, NBFCs Fill Gaps

Public sector banks continue to dominate as the preferred choice for borrowers due to competitive interest rates, institutional trust, and extensive branch networks. However, as borrowers age or have non-traditional income sources, they turn to NBFCs and microfinance institutions, which offer flexible eligibility criteria and more loan options. This enables wider access to homeownership for self-employed and middle-income individuals. Among younger borrowers aged 26–35 years, 48% prefer public sector banks, while only 11% opt for MFIs or NBFCs. In contrast, older borrowers aged 51–60 years, preference for public sector banks drops to 39%, and the share choosing MFIs or NBFCs rises to 21%, highlighting the role of NBFCs in filling the gaps left by traditional banks.

Evolving borrower expectations & persistent challenges

Interest rates remain the most influential factor in choosing a home loan, especially for younger borrowers under 34, who are highly rate-sensitive. However, speed, transparency, flexible terms, and customer experience increasingly influence lender choice. Excessive paperwork and mis-selling remain persistent concerns, which points to the need for simpler processes and stronger trust-building across the housing finance ecosystem.

Affordability trends and EMI preference

Rising incomes and improving financial confidence are reshaping borrower attitudes toward EMIs. Metro homebuyers are generally more comfortable with higher EMI-to-income ratios and longer loan tenures, while rural borrowers tend to prefer shorter repayment periods and more conservative EMI commitments. Reinforcing this trend, Knight Frank’s Affordability Index 2024 indicates improving EMI-to-income ratios across major Indian cities, supported by relatively stable interest rates and policy measures aimed at strengthening housing affordability.

Tier 2 & 3 cities emerging as the next growth engine

Improved connectivity, digital public infrastructure and rising financial awareness are helping bridge the metro–non-metro divide. Tier-2 and Tier-3 cities are emerging as key growth engines for housing finance, strengthening access to formal credit and expanding homeownership opportunities across Bharat.

Raj Vikash Verma, Former Chairman & Managing Director, National Housing Bank, added, “India’s housing finance ecosystem has become more diversified and consumer-centric. Strengthening inclusion in Tier-2 and Tier-3 markets, while improving transparency and trust, can make housing a powerful lever of social security, economic dignity and long-term national development.”

The launch brought together senior voices from policy, finance, media and investment ecosystems, including Raj Vikash Verma (Former Chairman & Managing Director, National Housing Bank), Dakshita Das (Former Additional Secretary, Department of Financial Services), Akshay Chiripal (Vice President, Bertelsmann India Investments), Sameer Mahajan (Chief Business Officer, DMI Housing Finance), Aman Dhall (Founder & CEO, CommsCredible Venture Fund), and Vivek Law (Media Veteran & Editor-in-Chief, ‘The Simple Hai Show’) —reflecting growing cross-sector momentum toward housing inclusion, digital lending, and expanding homeownership across Bharat.