Smarter loans, safer cards: How India’s youth are using credit differently in 2025

India’s retail credit story in 2025 is quietly changing—and it’s being reshaped by younger borrowers who are approaching loans with far more caution and intent than in the past. A year-end analysis by PB Fintech, the parent of Policybazaar.com, shows that Indians are entering the formal credit system earlier, but instead of borrowing to spend, they are borrowing to build.

One of the clearest shifts is visible in housing loans. Despite higher interest rates, home loan disbursements grew 12% during the year. What stands out is who is taking these loans. Nearly 16% of new home loan borrowers in 2025 were under the age of 30, almost double the share seen just three years ago. This suggests that young, salaried professionals—often part of dual-income households—are choosing to buy homes earlier, using stable incomes and better access to credit to plan long-term.

Loan sizes have grown, too. The average home loan now stands at about Rs 37 lakh, up from Rs 29 lakh three years ago, reflecting both rising property values and stronger borrowing capacity. Most young buyers are still opting for joint ownership, which accounts for 58% of housing loans, though a growing number are confident enough to buy on their own.

Credit cards, often seen as a gateway to impulsive spending, are also being used more thoughtfully. PB Fintech’s data shows that issuance of unsecured credit cards fell sharply in 2025, while secured cards, backed by fixed deposits, rose by over 60%. For many first-time borrowers, especially younger ones, secured cards are becoming a safer way to build a credit history without risking overspending.

Younger consumers are clearly driving this trend. Over a third of new cardholders were under 30, and nearly one in ten were under 25, far higher than a few years ago. Big cities continue to dominate card adoption, with Delhi-NCR and Mumbai leading the way.

Personal loans tell a similar story. While overall growth was strong at 35%, most of the increase came from small, short-term loans rather than big-ticket borrowing. These loans are increasingly being used to manage short-term cash needs, not fund lifestyle upgrades. Salaried individuals accounted for nearly 70% of these loans, highlighting the importance of steady incomes in responsible credit use.

Taken together, these trends point to a more mature retail credit ecosystem. Young Indians are borrowing earlier, but they are also borrowing smarter—choosing secured products, focusing on assets, and using credit as a tool rather than a temptation. For lenders, this shift could mean healthier portfolios. For borrowers, it signals a growing confidence in managing money with discipline and foresight.