By Priya Sharma, Senior Financial Correspondent with 12 years at The Economic Times
Key Takeaways
- New Rates: SBI raises base home loan rate by 10 bps to 8.60% p.a., effective July 1, 2025.
- Why Now?: Cited higher funding costs and rising bond yields.
- Impact: Means an EMI increase of ~₹750/month on a ₹50 L loan tenure 20 years.
- What’s Next: Borrowers can opt to retain old rates until their annual reset clause.
What Happened?
On June 21, 2025, the State Bank of India (SBI) announced via official press release that it will increase its External Benchmark Lending Rate (EBLR) on home loans by 10 basis points, moving from 8.50% to 8.60% per annum for new disbursals and customers undergoing annual rate reset w.e.f. July 1, 2025 sbi.co.in. This is the first upward revision since January’s rate hold.
Why It Matters
- Borrower Budgets: Existing borrowers nearing reset will see their EMIs creep up by ₹750–1,000 per lakh borrowed over a 20-year tenure.
- Housing Demand: Higher costs may dampen loan uptake, especially in Tier II cities.
- Real-Estate Prices: Developers may adjust pricing or offer rebates to counter slower sales.
Expert Insight
“In the current climate of elevated bond yields and rising wholesale funding costs, this upward tweak was almost inevitable,” says Dr. Rahul Gupta, Chief Economist at IIM Bangalore, with over 10 years of research on India’s credit markets (Profile). “Borrowers should compare floating versus fixed-rate offers and consider shorter-tenure resets to limit exposure.”
Daily Digest
- RBI Policy Preview: Repo rate decision due July 4—markets expect status quo.
- Peer Banks: HDFC and ICICI have held home loan rates since June; PNB raised theirs by 5 bps last week.
- Global Context: U.S. 10-year Treasury yields hover near 4.0%, feeding into offshore borrowing costs.
FAQ
Q1: How can I check if my loan resets on July 1?
Check your sanction letter or log into Yono SBI under “Loan Details” → “Interest Rate Reset.”
Q2: Can existing borrowers negotiate?
Yes—SBI offers a one-time “Rate Swap” to move to a fixed-rate segment (subject to eligibility and fees).
Q3: Are prepayment penalties affected?
No—prepayment and foreclosure charges remain unchanged.
Fact-Check
- Source Verified: Revised rates confirmed on SBI’s official site and customer notices sbi.co.in.
- No Rumors: Rate change was not part of any leaked RBI directive; it stems from internal ALCO review.
