Why Your EMI Stays High Even When Interest Rates Drop: Unpacking the Hidden Factors

• Your EMI doesn't reset with every rate cut; it's governed by loan terms and predefined reset intervals.
• Banks often extend loan tenure instead of increasing EMI when rates rise, which can keep EMIs stable but prolong repayment.
• Older loans (Base Rate, MCLR) transmit rate cuts slowly; newer external benchmark loans may have adjusted spreads.
• Interest compounding in early years amplifies rate hike impact, making rate cut benefits smaller later.
• Top-ups, moratoriums, and fees can inflate EMIs, making them seem unresponsive to rate changes.