SBI Slashes Home Loan Rates to 7.25%, EMI Set to Drop for Lakhs of Borrowers
In a move that brings cheer to homebuyers, the State Bank of India (SBI) has announced a cut in its home loan interest rates by 0.25 percentage points. Effective immediately, SBI home loan rates will now start from 7.25% per annum, down from earlier levels, making borrowing cheaper for both new and existing customers with floating-rate loans.
This reduction, announced on Tuesday, directly follows the Reserve Bank of India’s (RBI) recent decision to lower the key repo rate. SBI joins other major banks like HDFC and Punjab National Bank in passing on the benefit to consumers, signalling a positive trend for the housing and loan market.
How Much Will Your EMI Actually Fall?
The direct impact of the EMI reduction is tangible for household budgets. For existing borrowers with loans linked to SBI’s Repo Linked Lending Rate (RLLR), their interest cost will reset downwards in the next cycle.
On a ₹20 lakh home loan with a 20-year tenure, your EMI could drop by approximately ₹310 per month.
For a larger ₹30 lakh loan under the same terms, the monthly savings could be around ₹465.
These savings can either reduce your monthly outflow or, if you choose to keep the EMI same, help shorten the overall loan tenure.
Who Benefits from the Rate Cut?
This cut is particularly significant for a specific group of borrowers:
New Borrowers: They can now access SBI home loan rates starting from 7.25%, the lowest in recent months, making new purchases more affordable.
Existing Floating-Rate Borrowers: Customers with home loans linked to the RLLR will see their rates adjust automatically. The benefit will reflect after their next reset date, as per their loan agreement.
Fixed-Rate Borrowers: They will not see an automatic change. However, they can explore switching to a floating RLLR-linked plan, often after paying a nominal fee, to avail of the lower rates.
The RBI Repo Rate Link: Why Your Loan Got Cheaper
The reduction is rooted in monetary policy. Banks base their RLLR on the RBI’s repo rate—the rate at which they borrow from the central bank. A lower repo rate reduces banking system costs, enabling lenders to offer cheaper loans.
“This coordinated cut by major banks, led by SBI, is a direct transmission of the RBI’s accommodative stance,” explains a Mumbai-based financial analyst. “For consumers, it’s an excellent window to either secure a new loan or reduce the interest burden on an existing one.”
What Should Borrowers Do Now?
1. Check Your Loan Agreement: Confirm if your loan is linked to RLLR or the older MCLR system. RLLR-linked loans benefit faster.
2. Consider a Switch: If you have an older MCLR-linked or fixed-rate loan, calculate potential savings by switching to the new RLLR regime. The savings can be substantial, especially early in the loan tenure.
3. Shop Around: While SBI’s move is influential, compare rates from other banks like Bank of India and PNB, which are offering rates from 7.10%.
4. Boost Your Credit Score: A CIBIL score above 750 remains crucial to securing the best-possible rate from any lender.
With this being the third repo rate cut this year, the momentum is clearly in favour of borrowers. For aspiring homeowners, this reduction eases the path to ownership, and for existing buyers, it provides welcome financial breathing room.
