Welcome to the 183rd edition of The Pattern, a weekly newsletter where we dive into the latest from the world of economy, finance and technology. Let’s get started! 
  
If you’re an Indian borrower today, two things are happening at once. Your home loan is getting cheaper. Banks have already begun trimming rates after the RBI’s recent policy move (discussed in last week’s edition). At the same time, you’re part of a rapidly expanding group: millions of households carrying EMIs across home loans, personal loans, vehicles, credit cards, and everything in between. 

This combination — falling interest rates but rising participation — is shaping a new phase in household credit behaviour. 

Here’s what happened this week, and what it says about the direction of India’s credit cycle. 

Banks have started cutting home loan rates 
Following the RBI’s latest policy easing, major lenders have begun passing the benefit to borrowers. HDFC Bank, Punjab National Bank, Bank of Baroda and others have already reduced home loan rates. 

On long-tenure home loans, these small cuts matter. They translate into thousands of rupees shaved off monthly EMIs or create the option to prepay faster. For households with large liabilities, even marginal shifts in borrowing  costs can change repayment behaviour. 
 
Meanwhile, household debt is breaking records 
Alongside cheaper home loans came another data point: 28 crore Indians currently have outstanding loans, adding up to INR 15.7 lakh crore in household debt. 

The concentration is not within one credit category. It spans home loans, personal loans, auto loans, gold loans, education financing, and small-ticket credit lines. The total value of loans along with the breadth of participation is striking. A significant share of India’s adult population is now engaged with structured and formal credit. 

When so many borrowers carry obligations simultaneously, repayment patterns reflect broader household cash flow dynamics, not the pricing of one loan in isolation. 

The bigger picture: pricing and participation are rising together. Which implies: 
 
Affordability is improving. 
Lower mortgage rates ease monthly outflows for both new and existing borrowers, giving households more breathing room. 

Borrowing appetite remains high. 
The growth in the number of borrowers suggests people are not stepping back from credit — they’re, in fact, stepping in, even as obligations accumulate across loan types. 

Households are managing more EMIs at once. 
For lenders, this means repayment behaviour will increasingly depend on the total EMI load, not just the cost of one loan. 

Together, these shifts point to a lending environment where interest signals and borrower behaviour reinforce each other. 
 
What this means for lenders and underwriters  

Lower rates don’t always mean lower stress. 
They certainly improve individual loan affordability, but aggregate household leverage is rising. A borrower may save on a home loan EMI while adding another credit line elsewhere. The question becomes: What is the net effect on monthly cash flow? 

Cash flow matters more than interest rates alone. 
If a borrower frees up INR 2,000/month from a rate cut but takes on a INR 3,000 EMI for a new loan, their financial position doesn’t improve — it tightens. Monitoring aggregate outflows becomes more important than looking at any single product’s risk markers. 

Multiple credit lines redefine repayment risk. 
With millions of borrowers juggling several EMIs, lenders need a clearer view of cumulative obligations, income-based affordability, and behavioural trends across segments. Individual product performance tells only part of the story. 
 
The emerging pattern 

India is moving toward a multi-EMI credit culture. Home loans are getting cheaper just as consumer borrowing becomes more widespread, creating a landscape where large-ticket affordability improves even as total household exposure climbs. The question now isn’t just whether people can access credit, but how they stack and sustain multiple EMIs at once. 

What households do with their newfound breathing room will shape the next phase of the credit cycle: Do EMI savings translate into prepayments, or do they fund additional borrowing? Do delinquency trends shift among borrowers juggling several credit lines? Do lower home loan rates pull new segments into the housing market? And does household leverage continue to rise faster than income? 

These signals will determine whether India’s debt expansion steadies under falling rates or speeds up because of them. And they’ll shape how lenders define and assess risk in the months ahead. For now, households are benefiting from a softer rate environment... but the  actual test will come if the RBI tightens rates in the next financial year. A higher repo rate would raise EMIs again, and the true resilience of India’s multi-EMI borrowers would come into sharper focus. 
  

Reading list 

• New launch: FinBox Journey Studio that cuts journey building time from months to days 

• Banks bring back in-person verification as digital fraud risks escalate 

• A wage for housework? India's sweeping experiment in paying women 

• Global fintechs bet on India's prepaid forex cards as travel demand surges

•  SIP boom vs debt surge: Is India’s middle class getting richer or over-leveraged? 

That’s is all for this week. I’ll see you next time. 
 
If you liked this edition, please feel free to forward it to friends, colleagues, and your network. Do encourage them to subscribe as well. You can also follow FinBox on LinkedIn and myself on X to keep up with all the updates.    

Cheers,

Mayank