When you take a floating-rate home loan from your bank, they generally don’t inform you about any changes in interest rates.
More so, they are super fast in passing on the increase in rates (due to repo rate hikes) but are very slow in passing on the interest rate cuts. And even when they do, it may not be fully passed on to the borrowers. In fact, there are cases where banks increase rates automatically but when the rates are down, banks do not automatically pass on the benefit. It is only when the borrower realises and approaches the bank to have the rate reduced that the bank does it. That too they may ask for a letter and a processing fee for doing this change.
All this may not sound right ethically but the fact is, that banks are in the business of making money. They are not here to do any favours.
In fact, as per this ET article (link) – the banks are not required to inform each borrower individually about any automatic change in interest rates under the floating rate plan, as borrowers have already agreed to any such increase or decrease while executing loan agreements with lenders.
So as a borrower, it is your responsibility to find out (on your own as the bank won’t tell you) whether the interest rate of your loan has been increased (or decreased) regularly.
And why do you need to know that?
Because when the banks raise interest rates for existing home loans, they have two options. The first is to adjust the loan by extending the loan tenure so that the monthly EMI remains unchanged for the borrower. The second option is to increase the EMI and keep tenure the same as it was originally. This would result in higher EMI outgo. Banks generally take the first option (increase the tenure and keep the EMI constant). But that means you need to pay higher total interest during the extended tenure.
So unless you know that the bank has increased the rates, you will not be able to take the corrective steps (as discussed in what to do when banks increase home loan rates). Therefore, you should always keep a tab on what your bank is doing with your home loan rates, more so after RBI repo rate hikes.