Linking base rate to MCLR may not be good enough

Customers should still consider shifting to the best MCLR-linked home loan rate available

Home loan borrowers, who had taken loans before April 2016, can expect some relief from April 1. In the Statement on Developmental and Regulatory Policies issued along with the monetary policy statement on February 7, the Reserve Bank of India (RBI) said that it has decided to harmonise the methodology for determining benchmark rates by linking the base rate to the marginal cost of funds based lending rates (MCLR) with effect from April 1, 2018. At present, the average difference between the MCLR and base rate for banks is around 70 basis points.  

The RBI had introduced the MCLR regime