Page 187 - DMGT515_PERSONAL_FINANCIAL_PLANNING

Personal Financial Planning

Notes Flexible Mortgage Rate: is one in which the interest rate varies according to market
movements. This type of interest rate is called ‘adjusting’ or ‘floating’ rates. The risk factor
is high in this type of interest rates.
Some of the well-known mortgage-financing companies offering various types of mortgage in
India are as follows:

LIC Housing Finance
HDFC
ICICI Home Finance

SBI Housing Finance
UCO Bank
State Bank of India
State Bank of Mysore

Allahabad Bank
United Bank of India
United Commercial Bank of India
Bank of Baroda

Kotak Mahindra Bank
Citi Bank
HSBC
Standard Chartered Bank
Life Insurance Corporation of India enjoys complete market leadership in this sector. The private
financial institutions like commercial banks, cooperative banks, and other non-banking financial
companies are also registering steady growth since 2000. The estimated size of the organized
mortgage industry in India account only for 25% of the total housing investment in India which
is further increasing on year-on -year basis. Bottlenecks like low penetration capability, ignorance
amongst masses, poor accessibility, lengthy processing time, and elaborate documentation are
hampering smooth growth of this industry in India. The government of India’s 5-Year Plan
stresses for the overall development of the housing finance industry. Recently, the government
has accepted suggestions for the revamping of land laws, rental laws, fast mutation, and
registration process along with setting up of credit rating organization and modern mortgage
insurance products for the fast-growing mortgage market of India.

Self Assessment

State True or False:
6. The estimated size of the organized mortgage industry in India account only for 50% of
the total housing investment in India.

7. Flexible Mortgage Rate is one in which the interest rate varies according to market
movements.
8. Mortgages are also known as “liens against property” or “claims on property”.

9. Active management, on the other hand, simply invests in an index that measures the
overall stock market.

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