SBI Raises Home Loan Interest Rates by 25 BPs Amid RBI's Stable Repo Rate

Strategic Insights -

The country's largest bank, State Bank of India (SBI), has hiked home loan interest rates by 25 basis points (bps), taking the upper limit to 8.70%. This move comes ahead of the RBI's Monetary Policy meeting, where the repo rate remained unchanged at 5.55%. Since February 2025, the RBI has cut the repo rate by 100 bps, providing relief to customers on home loans and other loans. However, the RBI has indicated that further cuts are unlikely, making SBI's interest rate hike a significant development in the housing finance market.

Key Takeaways:

  • SBI has raised home loan interest rates by 25 bps to 8.70%, with the lower interest rate remaining at 7.50%.
  • The interest rate hike will increase the total cost of the loan by lakhs of rupees in the long run.
  • The move is a sign that banks' interest rates may become more stringent in the future, especially if inflation remains under pressure and RBI is forced to increase rates.
  • Existing customers can opt for balance transfer if they are getting a better rate from another bank.
  • Home buyers should compare interest rates and maintain a high CIBIL score to secure a lower interest rate.
  • Experts believe that this increase is a sign that the era of cheap rates on home loans is slowly coming to an end.
  • SBI's interest rate hike is a response to the bank's focus on risk and margin, rather than the RBI's stable repo rate.

Statistics:

  • SBI's home loan interest rates: 7.50% to 8.70% (new customers)
  • Bank of Baroda (BoB) home loan interest rates: 7.45% to 9.20%
  • Punjab National Bank (PNB) home loan interest rates: starting from 7.45%
  • Canara Bank home loan interest rates: 7.40% to 10.25%
  • HDFC Bank home loan interest rates: starting from 7.90%
  • ICICI Bank home loan interest rates: starting from 7.70% (can range from 8.75% to 9.80%)
  • Kotak Mahindra Bank home loan interest rates: starting from 7.99% (rate up to 12% for customers shifting from floating to fixed)
  • RBI repo rate: unchanged at 5.55% (August 2025)
  • RBI repo rate cuts: 100 bps since February 2025

Sources:

  • "SBI hikes home loan rates ahead of RBI policy meet" by The Economic Times
  • Contify.com (distributed by IE Online Media Services Pvt. Ltd.)