State Bank of India (SBI) has increased the minimum interest rate on home loans by 25 basis points to 6.95%, indicating the first push to a stiffening of rates after banks pushed it down to historical lows as they wrestled for market share.

Home loan interest rates are set to climb in other banks as well as they are expected to follow SBI’s footsteps. SBI’s new home loan interest rate came into effect from 1 April.

SBI had lowered the minimum interest rate from 6.80% to 6.70% on 1 March for a limited period up to 31 March. This had triggered a rate war and ICICI Bank had cut its home loan rate to 6.70% for loans up to Rs 75 lakh, the lowest offered by the private sector lender in a decade. Several other banks had also lowered their home loan rates.

SBI, which had sweetened its offerings by giving a 100% waiver on processing fees until 31 March, has started charging a consolidated processing fee. This is 0.40% of the loan amount plus applicable GST, subject to a minimum of Rs 10,000 and maximum of Rs 30,000 plus GST.

For builder tie-up projects where individual TIR (title investigation report) and valuation is not necessary, the processing fee will be 0.40% of loan amount subject to maximum recovery of Rs 10,000 plus applicable tax. As per the bank’s website, if TIR and Valuation is required, the standard charge will be applicable.

SBI had earlier said it is planning to double its home loan book to Rs 10 lakh crore in the next five years. Offering interest at the lowest rates, launching digital initiatives and starting a co-lending model are some of the steps the bank said it will take to grab home loan customers.

SBI took about 10 years to grow its home loan portfolio from Rs 89,000 crore in FY2011 to cross the Rs 5 lakh crore mark, Chairman Dinesh Kumar Khara told media in February.

After the SBI’s decision to up the interest rates on home loans, industry observers expect a few other banks to soon revise downwards their rates.