CHAPTER

4

MORTGAGE FINANCE:INSTITUTIONS AND MECHANISMS1

Despite its recognized economic and social importance, housing finance often remains underdeveloped in emerging economies. Residential lending is typically small, poorly accessible and depository based. Lenders remain vulnerable to significant credit, liquidity and interest rate risks. As a result, housing finance is relatively expensive and often rationed. The importance of developing robust systems of housing finance is paramount as emerging economy governments struggle to cope with population growth, rapid urbanization and rising expectations from a growing middle class.2

HIGHLIGHTS

Cost of houses and need for mortgage finance

The cost of a complete dwelling in the North is generally ...

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