Young Indians drive early borrowing, secured credit grows in 2025: Report

Secured cards and short-term loans see sharp growth as young borrowers enter credit

India’s retail credit market is showing clear signs of maturity in 2025, with young borrowers entering the formal credit system earlier and using loans more deliberately, according to a year-end analysis by PB Fintech, the parent company of Policybazaar.com.

 

Rather than borrowing to fund discretionary spending, first-time and young borrowers are increasingly choosing secured and asset-backed credit, signalling a shift towards disciplined financial behaviour and long-term planning.

 

Younger Indians are taking home loans earlier

One of the most striking trends is the rise in early home ownership among young Indians. PB Fintech’s data shows that housing loans grew 12 per cent year-on-year in 2025, reflecting steady demand despite higher interest rates.

 

 

Notably, 16 per cent of new home loan borrowers were under the age of 30 in 2025, nearly double the 9 per cent recorded in 2022. This trend points to younger salaried professionals entering the housing market earlier, supported by dual-income households and better access to formal credit.

 

The average home loan ticket size has also increased, rising to around Rs 37 lakh in 2025 from Rs 29 lakh three years earlier. Joint ownership remains the preferred route, accounting for 58 per cent of housing loans, while 42 per cent were taken by single borrowers.

 

Credit cards are being used to build credit, not splurge

Credit card usage patterns are also evolving. PB Fintech’s analysis suggests a clear move away from consumption-led borrowing towards structured credit building.

 

Issuance of traditional unsecured credit cards declined 21 per cent year-on-year in 2025, compared with a 6 per cent decline in the previous year. In contrast, secured credit cards, typically backed by fixed deposits, recorded strong growth of 62 per cent.

 

Younger consumers are driving this trend. Around 34 per cent of new cardholders were under the age of 30, while 9 per cent were under 25, up from just 3 per cent in 2022. Many first-time borrowers are choosing secured cards as a safer entry point into the credit system, helping them build a credit history without overextending themselves.

 

Delhi-NCR and Mumbai continued to dominate new card issuance, contributing 11 per cent and 6 per cent respectively.

 

Personal loans are increasingly short-term and need-based

Personal loans saw sharp growth in 2025, rising 35 per cent year-on-year, compared with 9 per cent growth in the previous year. However, this expansion was largely driven by short-term loans with smaller ticket sizes, which surged 77 per cent during the year.

 

According to PB Fintech’s data, borrowers are increasingly using personal loans to manage short-term liquidity needs rather than for long-term consumption. Salaried individuals accounted for nearly 70 per cent of personal loan disbursals, highlighting the role of stable incomes in driving credit uptake.

 

Metro cities continued to lead demand, with the top 10 cities contributing 34 per cent of total personal loan disbursals, led by Delhi and Mumbai.

 

What does this mean for borrowers and lenders?

The growing preference for secured credit and asset-backed borrowing suggests healthier credit behaviour among younger Indians. As more borrowers enter the credit ecosystem early and cautiously, this trend could support stronger credit profiles and a more resilient retail lending cycle in the years ahead, PB Fintech’s analysis indicates.