Buying A Home? Check These 5 PSU Banks Offering The Lowest Home Loan Interest Rates

With PSU banks publishing home loan entry rates near 7.10%, buyers are comparing rate slabs and credit-score bands after multiple December 2025 updates.

Home loan shoppers are getting a rare, tight pricing band from public sector banks (PSBs) in late 2025 and early 2026. Several lenders are advertising starting rates at 7.10%, while SBI is showing 7.25% p.a. onwards, effective 15.12.2025, on its official rate page. 

This has pushed more borrowers to check rate tables before applying, because the lowest rate is usually tied to top credit-score buckets and specific schemes. In mid-January 2026, Business Standard also flagged that home loan rates across lenders were ranging from 7.10% to 12.58%, keeping refinance conversations active. 

The Rate Race Trigger For Homebuyers

PSU banks are again pitching headline rates to attract prime borrowers, but the fine print is in the slabs. Official and lender-linked pages show the best “starting from” pricing typically applies to borrowers with strong credit scores, while other bands pay more. 

SBI’s own site lists 7.25% p.a. onwards with “w.e.f. 15.12.2025”. On the other hand, some PSBs are publishing entry rates at 7.10% for select borrowers, creating a narrow window where small differences in score or product can change the EMI.

Where The Lowest PSU Home Loan Rates Stand Today

As of the latest published updates, the lowest advertised entry rate among major PSBs is clustering at 7.10%. This is visible across official bank tables and lender information pages updated in December 2025 and January 2026.

Before the table, a quick reminder: these are “starting” rates shown publicly, not universal offers.
 

After the table, borrowers usually see the biggest benefit when they fit the top risk bucket. That is why many applicants are now checking credit score bands before locking a lender.

How This Pricing Shift Built Up Over 2025

The rate story through 2025 has seen lenders move in both directions, with cuts resurfacing again in December. SBI’s rate action was widely reported. A PTI report carried by The Economic Times (last updated 12.12.2025) said SBI reduced its lending rate by 25 basis points and indicated revised rates would take effect from 15.12.2025. 

India Today, in a report dated 15.12.2025, also detailed the benchmark-linked reduction, stating the EBLR moved from 8.15% + CRP + BSP to 7.90% + CRP + BSP, and RLLR from 7.75% + CRP to 7.50% + CRP. 

Telegraph India, reporting on 12.12.2025, similarly noted the EBLR reduction to 7.90% and confirmed the effective date as 15 December 2025. 

Before the second table, here is the core pattern behind the headline rates: the best slabs are linked to credit-score bands.
 

The takeaway is simple: entry rates look similar across PSBs, but the borrower’s score and scheme decide the final offer. That is also why rate comparison pages keep highlighting “start from 7.10%” as an entry point, not a guarantee. 

What Banks And Market Trackers Are Signalling

SBI, in its statement reported by multiple outlets, linked its 25 bps lending-rate reduction to lower benchmark-linked pricing and specified 15.12.2025 as the effective date. Market trackers such as LoansJagat have also listed Bank of Maharashtra at 7.10% in its “lowest home loan interest rate” roundup dated 26.12.2025, reinforcing the competition for top-score borrowers. 

Conclusion

PSU banks are currently competing in a tight band, with several lenders quoting 7.10% and SBI showing 7.25% from 15.12.2025. 

For borrowers, the winning move is matching eligibility and credit-score slab to the right bank, not just chasing the lowest headline rate.