RBI monetary policy: Will your home loan EMI fall due to rate cut?

New borrowers will benefit if banks cut their MCLR. Older borrowers' EMIs will change only when their reset date arrives

• After RBI’s 25-basis-point (bps) rate cut, home loan rates are expected to come down, but with a lag

• Many banks have already fixed their marginal cost of funds based lending rates (MCLR) for the month, so they may only revise them in March, unless the bigger players like SBI reduce rates in February, forcing others to follow suit

• New borrowers will benefit if banks revise their MCLR 

• Old borrowers will see a change in equated monthly instalment (EMI) only when their reset date arrives

• Suppose someone is on the one-year MCLR. His bank may cut the MCLR. Nonetheless, his EMI may not fall