SBI raises upper end of home loan interest rate band: Know the implication
State Bank of India (SBI), the largest lender in the country, has raised the upper end of the interest band on home loans. SBI is the market leader in home loans and it holds immense significance for its millions and millions of consumers.
Kolkata: The interest rate cycle in India is clearly on a downward curve. Reserve Bank of India has slashed its policy Repo Rate by 100 basis points -- from 6.5% to 5.5% -- between February and June. Many experts think another 25-point cut is likely this year. Amid such an environment, SBI, the largest commercial bank in the country, has raised the upper end of its home loan interest band.
As almost everyone knows, the EMI (equated monthly instalment) that a borrower pays every month is a result of the interest rate applicable on the loan. Therefore, raising the upper end of the band will raise the EMI on a lot of home loans. The change has been carried out from August 1, 2025, said reports. Incidentally, SBI is the market leader in home loans. With the market leader stretching the upper end of the interest band, it could result in the EMIs rising for a large number of customers.
The interest rates on home loans from SBI hovered between 7.50% to 8.45%. This has been changed to 7.50% top 8.70%. It is evident that the lowest rate remains unchanged. Incidentally, RBI kept its Repo Rate unchanged at 5.5% at the August meeting of the MPC (Monetary Policy Committee).
SBI home loan rates
If you login to the SBI home loan the following data will be displayed:
Home Loan (term loan): 7.50% to 8.70%
Home Loan Maxgain (OD): 7.75% to 8.95%
Top Up Loan: 8% to 10.75%
Top Up (OD) Loan: 8.25% to 9.45%
Loan Against Property (P-LAP): 9.20% to 10.75%
Reverse Mortgage Loan: 10.55%
YONO Insta Home Top-up Loan: 8.35%
However, SBI has mentioned in its website that the interest rate which is offered to an applicant follows a scrutiny of his/her creditscore. "All home loans are linked to external benchmark rate (EBLR) = 8.15%" says the SBI website.
The raising of the interest rate will impact those borrowers whose loans carry interest rate at the higher end of the band. When an individual applies for a home loan (as indeed for any loan), the creditscore of the individual is the first checkpoint for any bank. If the creditscore warrants that the applicant is allowed rates that are near the upper end of the interest rate band, they will need to shell out a higher EMI due to the rise on the interest at the upper end of the band.
The amount 25 basis points might not seem to be a big extent at first glance, but since home loans often involve a significant sum and since these loans are extinguished over a very long term, one could end up paying a lot more over the entire term.