SBI makes BIG announcement, home loan rates increased by…, EMIs to now cost more for customers; Here’s What it means for new borrowers

The bank has clarified that all home loan rates remain linked to the External Benchmark Lending Rate (EBLR), which currently stands at 8.15 per cent.

Even though the Reserve Bank of India (RBI) has cut the repo rate to 5.5 per cent to make borrowing cheaper, the State Bank of India (SBI) has increased home loan rates for new borrowers by 25 basis points. SBI’s home loan interest range has now gone up from 7.50 per cent – 8.45 per cent to 7.50 per cent – 8.70 per cent . This means people with lower credit scores could end up paying more, as the highest interest rate has been raised.

Other public sector banks, such as Union Bank of India, Bank of India, Bank of Maharashtra, and Central Bank of India, currently offer rates starting from 7.35 per cent and going up to over 10 per cent, depending on a borrower’s credit history.

Experts say other public banks might also increase rates following SBI’s move, even though the RBI’s repo rate cut was meant to bring down loan costs and give people some financial relief.

Earlier, SBI had said in a report that the RBI’s repo rate cut would make home loans cheaper. The impact would be felt fastest in loans linked to the External Benchmark Lending Rate (EBLR), which make up about 60% of all loans given by Scheduled Commercial Banks (SCBs), according to SBI Research.

As of August 2025, most new SBI home loans are tied to the EBLR, which is calculated as the RBI’s repo rate plus a fixed spread.

How SBI’s Rate Hike Could Affect Home Loan Borrowers

Let’s take an example of a Rs. 30 lakh home loan over 20 years.

Earlier rate (8.45 per cent)

• EMI: Rs. 25,830
• Total repayment: Rs. 61.99 lakh

New rate (8.70 per cent)

• EMI: Rs. 26,278
• Total repayment: Rs. 63.06 lakh

That’s about Rs. 450 extra per month, which may not sound huge at first, but over the full tenure, it adds up to over Rs. 1 lakh more in repayments.

For bigger loans: Say Rs. 50 lakh or more, this effect becomes even more significant, making home ownership costlier, especially for first-time buyers.