Viability of mortgage guarantee products in India

Abstract

For a developing nation like India, providing access to affordable housing has been a major goal. At the same time, the housing sector is seen as an engine of growth contributing significantly to the country’s GDP. Housing finance, crucial for the growth of the housing market, is still underpenetrated in India and offers huge potential to be tapped. Nevertheless, growing population, rapid urbanization and government schemes like the Housing for All are likely to boost the demand for housing finance in India. Mortgage guarantee, as a risk transfer tool, has been used successfully in some countries to encourage home ownership. However, even after three years of its introduction in India, the product is yet to take off. Through this project, an effort had been made to understand the reasons behind low penetration of the product and suggest measures to improve the same.