In a move that could signal a shift toward higher interest rates in the home loan market, India's largest mortgage lender, State Bank of India (SBI), has increased home loan rates by 25 basis points for new borrowers. The hike primarily affects applicants with lower credit scores, as the bank has raised the upper band of its loan rates. Union Bank of India has also increased its rates, and other public sector lenders may follow suit. During the last fortnight of July, SBI's mortgage rates ranged from 7.5% to 8.45%. After the revision, new borrowers will pay between 7.5% and 8.70%. Union Bank of India has raised its rate to 7.45%, up from 7.35% in late July. Both banks did not respond to emailed queries seeking an explanation for the rate hike. SBI has tweaked the rates based on CIBIL scores and the External Benchmark Lending Rate (EBLR). This is a low-yielding product for us, so we've decided to increase margins on new loans for borrowers with low credit scores. This change applies only to new customers and will not impact the ?8 lakh crore of outstanding loans," said a person familiar with the matter. Axis Bank, meanwhile, reported a year-on-year decline in home loan volumes, a segament it has struggled to grow for several quarters. Over the past four years, government-owned banks have steadily gained market share. Data from credit bureau CRIF Highmark shows that the share of new home loans by value for public sector banks rose to 43% in FY25 from 34% in FY22. Over the same period, the share for private banks fell to 29.8% from 42.6%.
 

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