As the Reserve Bank of India (RBI) signals a more cautious stance and banks begin passing on rate cuts, the timing couldn't be better for consumers considering festive loans this year. With Diwali and other major festivals around the corner, the combination of lower lending rates and seasonal offers is expected to boost credit demand across the housing and fintech sectors.

Vimal Nadar, national director and head of research at Colliers India, believes this shift is already beginning to bear fruit in the housing sector. “Prospective homebuyers have started benefitting from lower home loan interest rates and discounts as we usher into the festive second half of 2025, keeping housing sales steady across the major residential markets of the country,” he says.

The festive season usually acts as a psychological trigger for substantial purchases, and a decline in loan rates often provides additional momentum. Paramdeep Singh, an early-stage investor in fintech startups and a veteran across financial service companies like Intellect, GE Money and SBI, says, "A pre-Diwali rate cut could ease borrowing costs just as festive demand builds. I have seen in past cycles, like 2017, how even small policy shifts can unlock large volumes of lending."

Rohit Garg, CEO of Olyv, states, "With lending rates easing ahead of the festive season, we anticipate a significant surge in credit demand from salaried, self-employed, and digitally savvy consumers considering personal loans and short-term credit."

However, Garg also points out that the credit behaviour demonstrated today seem cautious and deliberate.

More consumers than ever are considering their credit scores and repayment behaviour. The preparedness mindset has evolved through active use of credit score planners, credit score tracking dashboards, and fraud alerts to assess the suitability of taking on new loans. “Responsibly resuming a consumer credit existence (as opposed to simply their ability to access loans) and long-term credit health is the new consideration,” Garg says.

In simpler terms, the modern borrower is doing their homework. While pre-approved festive offers and quick loans may tempt them, they are also considering repayment capacity, creditworthiness, and future planning.

"For fintechs, this is a moment to redesign festive lending products that are timely, simple, and accessible. Players that get this right will earn both upsized market share and long-term trust," Singh adds.