A floating interest rate changes periodically based on market conditions or benchmark rates.
Detailed Explanation
Floating interest rates fluctuate over time depending on external benchmarks such as the RBI repo rate or MCLR. When benchmark rates rise, the interest rate increases, and when they fall, the interest rate decreases. Most home loans in India are offered at floating interest rates.
Example
"If your home loan is linked to MCLR, your EMI may increase or decrease when RBI changes policy rates."