SBI’s Independence Day Gift: Lower Home and Car Loan Rates to Reduce Your EMI

New Delhi, August 15, 2025 – In a major relief for millions of its customers, the State Bank of India (SBI), the country’s largest public sector lender, has announced a reduction in its lending rates on the occasion of Independence Day. The move will make home and car loans cheaper, offering significant savings for both existing and new borrowers.

The bank has revised its Marginal Cost of Funds-Based Lending Rate (MCLR) down by up to 0.05%, effective from August 15, 2025. This rate cut will directly benefit borrowers with loans linked to MCLR or other floating rates. As a result, the Equated Monthly Installments (EMIs) for many existing home loan customers are likely to go down, and the cost of taking a new loan will also become more affordable.

Revised MCLR Rates from August 15

The updated MCLR rates, now in effect, are as follows:

• Overnight MCLR: Reduced from 7.95% to 7.90%

• 1-Month MCLR: Reduced from 7.95% to 7.90%

• 3-Month MCLR: Reduced from 8.35% to 8.30%

• 6-Month MCLR: Reduced from 8.70% to 8.65%

• 1-Year MCLR: Reduced from 8.80% to 8.75%

• 2-Year MCLR: Reduced from 8.85% to 8.80%

• 3-Year MCLR: Reduced from 8.90% to 8.85%

This cut, though modest, can make a meaningful difference in long-term loan repayment, especially for large-ticket borrowings such as home loans.

What This Means for Borrowers

Borrowers on floating interest rates linked to MCLR will automatically see the benefit when their interest rate is reset, as per the loan agreement. For new customers, this is an ideal time to apply for a home or car loan, as the borrowing cost has gone down.

For instance, a reduction of even 0.05% in interest rate on a home loan of ₹50 lakh over 20 years can save thousands of rupees in total interest payout or help shorten the loan tenure.

Home Loan Processing Fees

SBI currently charges a processing fee of 0.35% of the loan amount (excluding GST) on home loans. The minimum fee is set at ₹2,000, and the maximum is capped at ₹10,000.

Importance of CIBIL Score in Loan Approval

A borrower’s CIBIL score plays a crucial role in determining the interest rate they are offered. CIBIL, a leading credit information company, provides credit scores and reports based on an individual’s borrowing history. A higher score increases the chances of getting loans at lower interest rates.

In addition to CIBIL, credit bureaus like Experian, Equifax, and Highmark are also recognized by the Reserve Bank of India (RBI) for maintaining credit records.

Why SBI’s Move Matters Now

Interest rate changes by major lenders like SBI often influence market trends, prompting other banks to follow suit. This MCLR cut comes at a time when the real estate sector is showing signs of recovery, and demand for personal vehicles is rising.

For customers, especially those with existing loans, the reduction means more disposable income each month or faster loan repayment if they choose to maintain the same EMI. For potential borrowers, it’s an opportunity to lock in a slightly cheaper rate in a competitive lending market.

Bottom line: If you have an SBI home or car loan on a floating rate, keep an eye on your EMI in the coming months—it may get lighter. And if you’re planning to buy your dream home or car, SBI’s Independence Day announcement could be the perfect motivation to take the plunge.