SBI Increases Home Loan Interest Rates by 25 Basis Points

From August 1, 2025, SBI has increased its home loan interest rates by 25 basis points. The bottom rate holds at 7.50 per cent. At the top, the rate has moved to 8.70 per cent, above the earlier cap of 8.45 per cent. The change follows the Reserve Bank of India’s reduction of the repo rate, a move that has prompted many lenders to lower mortgage costs. HDFC Bank, Punjab National Bank and Bank of Baroda have reduced their housing loan rates. SBI has moved in the opposite direction, leaving new borrowers facing higher instalments.

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Impact on New Borrowers

The change will be most noticeable to new applicants. SBI adjusts pricing based on credit history, so customers with lower credit scores are more likely to be charged on the higher side of the band. That means monthly instalments will rise compared with earlier, making the overall cost of borrowing heavier across the tenure.

Take a ₹50 lakh home loan for 20 years. At 8.70 per cent, the EMI is approximately ₹44,000; at 8.45 per cent, it is approximately ₹43,200. The monthly gap is approximately ₹800, totalling roughly ₹1.9 lakh over the term.

Effect on Existing Customers

For those who already have SBI home loans, the situation is slightly different. The bank has trimmed its Marginal Cost of Funds-based Lending Rate (MCLR) by up to five basis points. That offers a slight relief to MCLR-linked borrowers. Loans tied to the External Benchmark Lending Rate (EBLR) may also see lower outgo because of the repo cut.

Even so, SBI’s wider spreads leave new borrowers paying more, while existing ones receive only limited benefits.

Rate Bands Across Products

SBI has revised not just its standard home loan but the entire portfolio. The updated interest ranges are:

Loan Type	Interest Rate Range
Term Home Loan (regular)	7.50% – 8.70%
SBI Maxgain (OD)	7.75% – 8.95%
SBI Top-Up Home Loan	8.00% – 10.75%
Top-Up (OD)	8.25% – 9.45%
SBI Loan Against Property (P-LAP)	9.20% – 10.75%
SBI Reverse Mortgage Loan	10.55%
YONO Insta Home Top-Up Loan	8.35%

Industry Context

The timing stands out. Recently, the Reserve Bank of India reduced the repo rate, and many banks, both private and state-run, have cut mortgage costs. Market watchers see SBI’s decision as a way to protect profit margins, a pressure point for public sector lenders.

Some experts suggest it could serve as a signal. If profitability pressures intensify, more banks may follow SBI’s lead, despite the central bank’s softer stance.

Outlook for Borrowers

For new applicants, this highlights the importance of comparing offers across banks before finalising a loan. A stronger credit score can also help in securing a rate closer to the lower band. Existing borrowers can seek a tenure reset, make partial prepayments, or consider a home loan balance transfer if the net savings are evident.