Inflation Fuels Personal Loan Growth In 2026: Consolidation, Gold Loans Surge

Inflation-led cost pressures are keeping personal loan demand elevated in 2026, but borrowing is shifting towards debt consolidation, emergencies, and secured options like gold loans.

Personal loans are seeing steady traction in 2026 as households manage high everyday costs and expensive revolving credit. In the US, unsecured loan balances rose 10% in 2025 to a record $276 billion, while the number of borrowers increased to 26.4 million from 24.5 million. 

Credit card balances also climbed 4% to $1.15 trillion, which is keeping consolidation demand active. In India, retail credit momentum is visible too, with gold-backed borrowing turning into a major liquidity route.

Shift From Lifestyle Borrowing To Survival And Consolidation Loans
 

Inflation is not triggering a spending boom. It is pushing more borrowers to use personal loans for targeted needs: consolidating high-interest balances, funding essential expenses, and bridging short-term gaps. 

A key feature in 2026 is the split in behaviour. Prime borrowers are shopping rates and refinancing smartly, while riskier segments are borrowing to keep up with higher costs. Banks are watching credit quality closely even as demand stays firm.

Global Personal Loan Growth Signals Strong But Selective Expansion

The strongest signal for 2026 is that personal loan demand is staying active, but lenders are separating borrowers by risk and pricing. TransUnion lifted its 2026 forecast for new unsecured personal loan growth to 11.2%, up from an earlier 5.7% estimate. This comes after 2025 balances reached $276 billion and borrower count hit 26.4 million.

Mortgage rates also shape borrower decisions. In the US, the average 30-year fixed rate was 6.07% and the 15-year fixed was 5.45% as of 23 Feb 2026, indicating borrowing costs are still high, just off peaks. In Australia, fixed mortgage repricing is back in focus, with lenders lifting fixed rates by up to 0.3% across over 200 loan products, showing how inflation expectations feed into retail borrowing choices globally.

Before moving to India’s trendline, here is the global snapshot:
 

Gold Loans And Retail Credit Surge Reshape India’s Borrowing Mix

India’s recent data trail shows how inflation-linked asset values can redirect borrowing. The Economic Survey coverage highlighted that personal loans rose 12.8% YoY in Nov 2025, while loans against gold jewellery jumped 125.3% YoY.
 

Business Standard also flagged the same 125.3% surge and linked it to bullion prices rising about 60% over the year, raising collateral values and borrowing capacity. Angel One reported gold loans rose 125% YoY to about ₹3.50 lakh crore by end-Nov 2025, reinforcing the scale of secured borrowing. 

Bankers also saw broader demand improving. A Business Standard report on a bank lending survey said overall loan demand strengthened in Q3:2025-26, with expectations improving for Q4:2025-26, helped by retail/personal loans among other segments. 

Meanwhile, system funding is tight: the credit-deposit ratio touched a record 82%, highlighting why lenders may stay selective on unsecured risk.

Statements By Stakeholders

The Fed’s January 2026 loan officer survey said banks expect demand to strengthen across categories in 2026, while also expecting deterioration in credit quality for most consumer loans. In the Reuters report, TransUnion’s Michele Raneri linked rising unsecured loan use to credit card debt consolidation and cost pressures on lower-income borrowers.

Conclusion

Inflation is keeping personal loan demand alive in 2026, but usage is becoming more need-based and lender-led. Rate shopping remains critical. LoansJagat estimates prime-borrower personal loan rates around 13% to 15% in Feb 2026, while published caps above 20% are still common.