New home loan rate regime: Shift, if you are getting a much better deal

Just remember, that better transmission will also mean faster increase in home loan rates in a rising interest rate scenario

If you are a home loan customer, you may have felt that your bank is quick to revise its interest rate upward in a rising rate scenario, but is slow to bring it down in a falling rate scenario. This should change from April 1, 2019. To ensure faster transmission of policy rates, the Reserve Bank of India (RBI) has mandated that all new floating loans to retail customers and micro and small enterprises should be linked to external benchmarks.

Home loans given currently are linked to the marginal cost of funds-based lending rate (MCLR). The MCLR was introduced in April