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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. However SBI also cautioned that while lower rates are good news for borrowers banks may still face pressure on their profit margins going forward.