In the process, more banks have started linking home loan rates to 6-month marginal cost of funds based lending rate (MCLR). But when MCLR came into effect, banks had to set at least five MCLR rates: overnight, 1 month, 3 month, 6 month and 1 year. If you are on a 6-month MCLR, your home loan will get reset in 6 months and in case of 1-year MCLR, it will get reset in 1 year. Though ICICI Bank’s 6-month MCLR is at 8.15% and 1-year MCLR is at 8.20%, in both cases the home loan interest rate is at 8.35-8.40% for salaried borrowers for amount of up to Rs30 lakh. If there is no difference in the final home loan rate you get, you can pick any of the MCLRs.

Source: Mint May 28, 2017 17:03 UTC