Even after the RBI reduced the repo rate, the country’s largest bank, SBI, has increased the home loan interest rates for new customers by 25 basis points. The interest rate from the bank has increased from 8.45 percent to 8.70 percent. After this, the interest rate on a home loan has increased from 7.50 percent to 8.70 percent.
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This change will affect those customers more, whose credit scores are low. According to the information, home loans in Union Bank of India, Bank of India, Bank of Maharashtra, and Central Bank of India start at a 7.35 percent interest rate and can be maximum 10.10 percent or more.
How is the home loan interest rate decided?
The interest rate on a home loan depends on your credit score. After the State Bank of India, other banks can also take such a decision. RBI has cut the repo rate by 100 basis points or one percent three times till 2025.
The current repo rate is 5.5 percent. It is cut to give relief to the common people. When the RBI cuts the repo rate, there is a possibility of a reduction in interest rates on other loans, including home loans, which directly benefits the common people.
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Home loans become cheaper due to a reduction in the repo rate
The interest rate at which money is given to banks by the RBI is called the repo rate. In a report, SBI had said that the reduction in repo rate will make home loans cheaper. This change will be felt first in those loans that are linked to the External Benchmark Lending Rate (EBLR). By August 2025, SBI home loans will be linked to EBLR mainly for new borrowers.