Why is My Floating Rate Loan Not Going Down?

Update: 2025-09-04

Description

This week, Monika explains why so many borrowers feel cheated when their home loan EMIs don’t drop even after RBI cuts rates. The key difference lies between banks and housing finance companies (HFCs). While bank loans are linked to external benchmarks like the repo rate, HFCs use their own prime lending rates — numbers they control and reset far less frequently. Monika breaks down how this allows HFCs to delay or dilute rate cuts, and why old borrowers often continue paying higher EMIs while new borrowers get lower rates.

Monika highlights the importance of understanding who your lender is, how benchmarks are set, and why RBI rules apply differently to banks and HFCs. She cautions borrowers about conversion fees, reset periods, and the hidden costs of staying with an HFC, and urges listeners to explore switching to a bank loan for faster and fairer rate transmission.

This week’s listener questions include Subroto Baul from Gurgaon on estate planning and providing for minor children, Milan Jhadav from Vadodara on choosing between index funds and asset allocation funds for a 10-year goal, and Prateek Dubey from Madhya Pradesh on deciding between NPS and the new Unified Pension Scheme.

Chapters:

(00:00 – 00:00 ) Why Floating Rate Loans Don’t Fall as RBI Cuts Rates

(00:00 – 00:00 ) Understanding Banks vs HFCs

(00:00 – 00:00 ) Legacy Planning Challenges

(00:00 – 00:00 ) Asset Allocation for Child’s Education

(00:00 – 00:00 ) NPS vs UPS for Government Employees

If you have financial questions that you’d like answers for, please email us at ⁠mailme@monikahalan.com⁠

Monika’s book on basic money management

⁠⁠https://www.monikahalan.com/lets-talk-money-english/⁠⁠

Monika’s book on mutual funds

⁠https://www.monikahalan.com/lets-talk-mutual-funds/⁠

Monika’s workbook on recording your financial life