RBI Cut the Rate, But No Relief in EMIs Yet!
The RBI reduced the Repo Rate two months ago, which ideally should lead to lower home loan EMIs. But if your EMI hasn’t gone down yet, here’s why.
Many borrowers have home loans linked to the MCLR (Marginal Cost of Funds-based Lending Rate), which is set by individual banks. While the Repo Rate is set by the RBI and impacts the broader interest rate environment, MCLR doesn't adjust immediately. There's a time lag before banks reduce MCLR in response to a Repo Rate cut.
So, even though the RBI has made borrowing cheaper, your bank may not have revised the MCLR yet — and that’s why your EMI remains unchanged.
If your EMI is still high, you have two options:
1. You can request your bank to switch your home loan from MCLR to a Repo Rate-linked loan. This usually results in faster transmission of rate cuts.
2. If your bank doesn't offer this or delays the switch, consider transferring your home loan to another bank that offers a lower interest rate and has Repo Rate-linked options.
Always compare interest rates and transfer charges before making a move. A little effort can help you save a significant amount over the loan tenure.