Home Loan Borrowers Decline by 35% in FY25, Yet Average Mortgage Size Rises in Gujarat

AHMEDABAD: Gujarat’s housing finance landscape is showcasing a contrasting development—while the overall disbursement of home loans is increasing, the number of individual borrowers is witnessing a significant decline.

In FY 2025, total housing finance disbursals in the state reached ₹58,399 crore, reflecting an 8.9% rise from ₹53,590 crore in FY 2024. However, during the same period, the number of home loan accounts fell steeply by more than 35%, dropping from 6.9 lakh to 4.46 lakh, as per data released by the State Level Bankers’ Committee (SLBC) – Gujarat.

This emerging trend signals a notable shift: while fewer individuals are opting to buy homes, those who do are borrowing higher amounts. This rise in average loan ticket size could be indicative of escalating property prices or borrowers stretching their budgets further to secure homes.

“There has been a noticeable decline in demand for new homes, particularly in the affordable and mid-income segments over the past six months,” stated a senior SLBC-Gujarat official.

“The HDFC-HDFC Bank merger had previously caused a spike in the number of home loan accounts and disbursals during the last fiscal year. What we’re observing now is both the high-base effect and a genuine deceleration in first-time or entry-level homebuyers.”

Real estate developers in Ahmedabad corroborate this assessment. While the luxury housing sector continues to draw interest—especially from non-resident Indians (NRIs) and high-net-worth individuals seeking secure investment avenues—the affordable and mid-tier segments are experiencing reduced buyer activity.

This trend is not confined to Ahmedabad alone but is seen across Gujarat. Housing finance institutions are issuing bigger loan amounts, but to a smaller customer base. This suggests a consolidation in market demand and possibly a widening gap between housing prices and what buyers can afford.

“After the pandemic, there was a surge in homeownership aspirations, with many shifting away from rented accommodations. However, over the last three years, escalating land prices and construction costs have significantly inflated home prices. Income growth hasn’t matched this inflation, leading to a cooling market.

The affordable segment is under particular strain, while the premium housing market continues to perform relatively well,” explained Viral Shah, vice president of CREDAI Ahmedabad.

Kamal Vataliya, vice-president of the Ahmedabad Realtors’ Association, noted that booming equity markets have also influenced investment trends. “Over the past three years, stock indices have hit record highs.

As a result, several traditional real estate investors have shifted their focus to equities, diverting funds they might otherwise have used for home down payments. This has contributed to delays in property purchases.”

Although the average home loan ticket size has climbed by 66% over the last five years, industry experts caution against viewing this as an indicator of increased wealth or improved living standards.

“Often, it’s not about people upgrading to larger or more luxurious homes,” said a source in the banking sector. “More frequently, it’s the same type of property costing significantly more than it used to. Rising property prices are compelling borrowers to stretch their financial limits.”