SBI Gives Customers a Big Surprise! Home Loans Just Got Costlier Despite RBI Rate Cuts – Here’s How It Affects You.

SBI raises home loan rates despite RBI cuts — here’s what borrowers must know

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SBI Gives Customers a Big Surprise! Home Loans Just Got Costlier Despite RBI Rate Cuts – Here’s How It Affects You.

The State Bank of India (SBI) has shocked customers this festive season by bumping up home loan interest rates—even though the Reserve Bank of India (RBI) slashed the repo rate to 5.5%. Find out how the new rates affect your EMI and what rules are changing for both new and existing customers.

What’s Changed?

Despite RBI’s repo rate cut and its decision to hold steady in August, SBI has increased the upper limit of its home loan interest rate from 8.45% to 8.70%, effective 1 August 2025—a 25 basis point jump. The lower limit remains unchanged at 7.50%.

What Are the New Interest Rates?

Here’s the updated rate chart for various SBI loan products, effective from August 1:

Home Loan (term loan): 7.50% – 8.70%
Home Loan Maxgain (OD): 7.75% – 8.95%
Top-Up Loan: 8.00% – 10.75%
Top-Up (OD) Loan: 8.25% – 9.45%
Loan Against Property (P-LAP): 9.20% – 10.75%
Reverse Mortgage Loan: 10.55%
YONO Insta Home Top-Up Loan: 8.35%

How This Will Affect Your EMI

Only borrowers priced at the upper interest band will feel the pinch—especially those with lower credit scores.

For example:

On ₹30 lakh for 20 years:
At 8.45%, EMI ≈ ₹25,830
At 8.70%, EMI ≈ ₹26,278

→About ₹450 more per month, or over ₹1 lakh extra across the loan tenure.

For larger loans, like ₹50 lakh or above, the cost increase will be even more significant.

Good News for Existing Borrowers (MCLR-linked Loans)

If your home loan is MCLR-linked, there’s relief on the horizon too:

Effective 15 August 2025, SBI has reduced MCLR rates by up to 5 basis points—bringing the range down from 7.95%–8.90% to 7.90%–8.85%. Once your loan hits its reset date, your EMI will drop accordingly.

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Why Is SBI Raising Rates When RBI Has Cut Them?

This might seem contradictory, but here’s the breakdown:

EBLR loans (External Benchmark Lending Rate)—applicable to new loans—tie directly to the repo rate plus bank’s spread.
SBI has kept the spread (or risk premium) higher for customers with lower credit scores to protect profit margins in the face of falling policy rates.
Essentially, they’re passing cuts to existing customers (via MCLR), but charging a little extra on the new ones with poorer financial profiles.

Who’s Impacted the Most?

Borrower Type	Effect on EMI
New borrowers with low credit score	Higher EMI (up to 25 bps higher)
New borrowers with excellent credit	Still possible lower rate (7.50%)
Existing MCLR-linked customers	EMI likely to decrease after reset

What Should Home Buyers Do?

Check your credit score—aim for 750 or above to qualify for the lower rate.
If your EMI jumps after the rate hike, you can:
- Pay a lump sum to keep EMI and tenure the same.
- Extend tenure within permissible limits.
- Increase EMI to finish repayment faster.
- Or combine any of the above strategies..

In Summary

SBI hiked home loan rates for new borrowers from 8.45% to 8.70% (upper band).
Lower limit remains at 7.50%.
MCLR-linked loans get relief via a 5 bps cut effective 15 August.
Borrowers with lower credit scores will bear higher EMIs, while disciplined borrowers may still enjoy lower rates.
Bottom line: your credit discipline now plays a key role in how affordable your dream home will be.

Conclusion:

SBI’s move signals a risk-focused approach – rewarding financially disciplined borrowers while penalizing risky profiles. For homebuyers, a strong credit score is no longer optional; it’s the key to saving lakhs. As festive season deals approach, audit your finances, negotiate with banks, and leverage EMI calculators to avoid payment shock