‘Housing demand among first-time homebuyers likely to surge on reduced interest rates’

With home prices climbing steadily in major cities, the definition of affordable housing is overdue for an update. Atul Monga, CEO & co-founder of BASIC Home Loan, believes that the current ₹45 lakh threshold no longer reflects ground realities, especially for middle-class families in metros. In an insightful conversation with Fortune India, Monga highlights the challenges that urban households face in securing suitable housing and discusses how recent RBI rate changes are reshaping demand, particularly in Tier 2 and 3 cities.

He also offers a glimpse into the future of home loans, which he thinks will be fully digital, real-time, and personalised. He also explains how fintechs and traditional lenders can work together to bridge the credit gap for underserved borrowers through alternative data and smarter underwriting.

Edited excerpts: 

With rising property prices, do you think there is a need to redefine affordability in urban India?

The current benchmark—homes priced up to ₹45 lakh—simply doesn’t match the ground situation in metros such as Mumbai, Bangalore, or Gurgaon. In these cities, ₹45 lakh often won’t get you a well-located, liveable home, making it especially hard for middle-class families to find housing within this bracket.

Take a typical household earning ₹10 lakh a year. After living expenses, they might be left with ₹25,000–30,000 a month to invest or save. In metro cities, where a ₹75 lakh home is a more realistic option, this would mean taking a ₹50 lakh loan, resulting in EMIs of ₹30,000–40,000. It’s a stretch, yes, but with the right policy support, it’s also within reach.

With RBI's recent monetary policy changes, how is the current interest rate environment affecting home loan disbursements?

The recent policy changes in India have positively influenced the demand for home loans, particularly in Tier 2 and Tier 3 cities. In response, many banks have reduced their interest rates. This development is likely to increase housing demand, especially among first-time homebuyers.

We are seeing more customers comparing interest rates before choosing a lender, which makes rate transparency and digital guidance more important than ever. To support borrowers in this environment, we suggest features like step-up EMIs, easy balance transfers, etc, to help them make informed decisions quickly and confidently.

What does the home loan of the future look like, in your opinion? Would it be fully digitised or real-time?

The future of home loans will be fully digital, real-time, and personalised. In India, the digital lending market, valued at $38.2 billion in 2021, is expected to reach $515 billion by 2030. Imagine it like booking a cab—fast, simple, and tailored to your needs. No more paperwork or branch visits. Loans will be processed instantly, with updates in real-time, offering a seamless and transparent experience. This shift will make home financing easier, quicker, and accessible to millions of Indians.

Affordable housing remains a top priority for the government, yet many middle- and lower-income groups struggle to qualify for loans. How can fintechs and traditional lenders bridge this gap?

I think fintechs and traditional lenders can help more people get home loans by tapping into alternative data and using smarter credit assessment tools. Many creditworthy borrowers in lower income segments lack formal credit histories. By looking at everyday data like rent payments, mobile phone use, utility bills, and spending habits, lenders can get a better idea of how someone manages their money. Add AI tools and local support into the mix, and you get a much fairer and smarter way to lend.

Do you foresee AI-powered chatbots or virtual loan advisors becoming mainstream in the Indian lending ecosystem?

AI-powered virtual loan advisors are set to become the first point of contact for most borrowers in India in the near future. Products like mortgages involve significant subjectivity in aligning customers with suitable lenders or products. Earlier, traditional, non-AI technologies relied on rule-based engines, making it nearly impossible to account for every possible scenario. However, with advancements in AI, these subjective analyses can now be effectively managed by AI agents.

Going forward, AI will help transform credit by making it more approachable and personalised, eliminating the fear and complexity often associated with the borrowing journey.

How are you and other lending fintech players transforming the loan application and approval process to be faster and more seamless?

We use advanced AI models to match lenders in real time by evaluating over 300 parameters, including credit data, bank policies, and borrower intent. As fintech lenders, we’re leveraging AI and automation to streamline and accelerate the loan process. The primary challenges today—slow processing, manual paperwork, and limited visibility—are solved with our cutting-edge solutions.

Our real-time lender matching algorithms, instant eligibility and affordability checks, and AI-powered tools like OCR and document extraction ensure quick and accurate document verification. eKYC integration and digital workflows provide a seamless application experience, while AI-driven tracking keeps all stakeholders updated. These innovations reduce loan processing times from weeks to minutes, making the system faster, more transparent, and scalable.