Six banks, including SBI and PNB, have revised their home loan lending rates, according to reporting by Livemint. The report doesn't tell us how each bank's rate moved, so check your own bank's notice.
If you have a floating-rate home loan, your EMI or loan term could change. Your EMI is the fixed amount you pay each month. Read your bank's message before you act.
Key takeaways
- Six banks, SBI and PNB among them, have revised home loan lending rates, as reported by Livemint.
- Floating-rate borrowers feel it first, through a new EMI or a longer or shorter loan term.
- Even a small rate gap adds up to lakhs over a 20-year loan.
- Check your bank's notice and compare it with other lenders before you decide.
How home loan lending rates work
Most new floating-rate home loans are linked to an external benchmark. Often that's the repo rate, which is the rate at which the RBI lends money to banks. The bank then adds its own margin on top. That margin is called the spread.
When the benchmark or the spread changes, your loan rate resets on a set date. Banks can also revise the rates they offer to new borrowers. That doesn't always touch old loans. Your loan agreement tells you which case applies to you.
Older loans may follow a different base, such as MCLR. That's the bank's own cost-of-funds rate. These loans usually reset on their own schedule, often once a year.
What a rate revision means for your EMI
The headline gives no figures, so let's use a made-up example. Say you owe ₹50 lakh for 20 years at 8.50%. Your EMI is about ₹43,391.
If the rate rises by 0.25 points, the EMI goes up by about ₹795 a month. That's roughly ₹1.9 lakh more over 20 years. A fall of the same size saves about the same amount.
| Interest rate (example) | Approx. EMI on ₹50 lakh | Monthly difference | Over 20 years |
|---|---|---|---|
| 8.25% | ₹42,600 | ₹791 lower | ₹1.9 lakh less |
| 8.50% | ₹43,391 | Base case | Base case |
| 8.75% | ₹44,186 | ₹795 higher | ₹1.9 lakh more |
| 9.00% | ₹44,986 | ₹1,595 higher | ₹3.8 lakh more |
These rates are examples only. They aren't any bank's actual rates.
Some banks keep your EMI the same and change the loan term instead. A longer term means more months of interest. Always check which one your bank has done.
Who is affected
- Floating-rate borrowers with these six banks see the biggest effect.
- New applicants may see different offers from today.
- Borrowers thinking of a balance transfer have a fresh number to compare. A balance transfer means moving your loan to another bank.
- Fixed-rate borrowers are mostly unaffected until their fixed period ends.
What to do now
- Read your bank's message, or log in to check your current rate.
- Find out if your EMI or your loan term changed.
- Put your numbers into our EMI calculator.
- Compare today's offers in our interest rate tables.
- Ask your bank for a lower spread if your credit score is strong.
- If you can, pay a little extra toward the principal each year.
Switching banks costs fees, so count them first. Our home loan guides explain how a balance transfer works. You can also follow other rate stories in the news hub.
Frequently asked questions
Will my EMI change on its own?
It depends on your loan. Many banks keep the EMI and change the loan term instead. Banks are expected to tell you about a reset.
Does this affect fixed-rate home loans?
Not until the fixed period ends. After that, the loan usually moves to a floating rate.
Should I switch banks right now?
Don't rush. Compare the full cost, including processing fees, before you move your loan.
BankCreds analysis
The headline sounds big, but the effect on you depends on the direction and the size. A revision of 0.10 to 0.25 points is common and rarely worth panic.
Take a salaried couple with a ₹50 lakh loan, ten years into a 20-year term. A 0.25 point gap between two banks is worth about ₹800 a month. Switching costs fees, so the saving takes time to show.
The over-reading to avoid
Six banks revising rates doesn't mean all home loans are getting costlier. Bigger drivers are the RBI's repo rate and your own credit score. This week, just check your rate and note your next reset date. Act only if your lender is now clearly pricier than others.
This section is BankCreds' own assessment of what the development means for Indian borrowers and savers. It is independent commentary, not part of the source reporting above.
Sources & references
- Livemint — originating report https://www.livemint.com/money/personal-finance/home-loan-alert-sbi-pnb-and-4-other-banks-revise-lending-rates-how-borrowers-may-be-affected-11792208843566.html
- RBI Master Directions — RBI rules on floating-rate loans linked to an external benchmark https://www.rbi.org.in/Scripts/BS_ViewMasDirections.aspx
Source links are shown as plain text, not clickable links. Copy a URL into your browser to read the original report.
Editorial note & disclaimer
How this was reported. The development above is attributed to the source or sources listed. BankCreds does not independently verify a third party's reporting; where a figure or a regulatory position is stated as fact, it is either attributed or drawn from the regulator's own published material. Everything under "BankCreds analysis" is our own assessment.
Rates and figures. Interest rates, per-gram values and premium bands quoted here are indicative, move daily, and differ by borrower profile, city and lender policy. Confirm the final number with the institution before you act on it — the sanction letter or policy schedule governs, not a news report.
Not financial advice. This article is general information for an Indian audience. It is not investment, tax, credit or insurance advice, takes no account of your circumstances, and BankCreds is not a lender, broker, distributor or advisor. Consider speaking to a SEBI-registered investment adviser or a qualified professional before acting.
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