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Despite the reduction in repo rate by RBI, the country's largest bank, SBI (SBI Home Loan), has increased the home loan rates by 25 basis points for new customers. The bank has increased the maximum interest rate from 8.45 to 8.70. Now the bank's interest on home loans has increased from 7.50 percent to 8.70 percent.

This change in interest rates will especially affect those customers whose credit score is low. Home loan of other public sector banks like Union Bank of India, Bank of India, Bank of Maharashtra, and Central Bank of India starts at 7.35 percent interest rate, and the maximum rate can be 10.10 percent or more.

On what does the interest rate of a home loan depend

The final interest rate depends on the credit profile of the loan taker. After the State Bank of India, other banks can also take steps in this direction. RBI has cut the repo rate by 100 basis points or one percent three times so far in 2025.

At present, the repo rate is 5.5 percent. The purpose of this cut was to provide relief to the general public. This cut by the RBI was likely to reduce interest rates on various loans, including home loans, which can indirectly benefit the general public.

Home loans become cheaper due to a reduction in the repo rate
The interest rate at which the RBI gives money to banks is called the repo rate. SBI had earlier said in a report that home loans will be cheaper due to a reduction in the repo rate. This change will be felt first in those loans which are linked to External Benchmark Lending Rate (EBLR). By August 2025, SBI's home loans will be linked to EBLR mainly for new borrowers.

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