Munich Personal RePEc Archive

Problems Faced by Financial Institutions and Borrowers in House Financing

Chand, Rewa (2006): Problems Faced by Financial Institutions and Borrowers in House Financing.

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This study analyzes and explores the Problems Faced by Financial Institutions & Borrowers in House Financing. Due to time constraints, the research is limited to certain core points. Main focus is to find out what are the main problems faced by different financial institutions in recovery and what are the main reasons people default to repay their house loans. The steps were taken by different financial institutions against borrower default. What Policies should be maintained by a financial institution to reduce the default rate? The study also focused on product characteristics required by the different borrowers and identify approval problems in the house loan.

Due to the shortage of primary data availability in references of Pakistan, the study is designed in an exploratory form to get the maximum insight into the topic within a limited time period. Data is gathered through questionnaires and interviews both are structured. The respondents of the study are HBFC and Banks and consumers of house finance Through this research it is found that financial institutions are facing problems in recovery and borrowers in inappropriate product characteristics and approval problems. So financial institutions should reorganize their policies and procedure to reduce the default rate and give appropriate product characteristics to the borrower of house financing. The borrowers should repay their loans on time so that financial institutions can provide them with better product attributes.

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