Housing finance all
over the world are undergoing tremendous changes and have acquired great
significance in the present day context of liberalization, globalization and
modernization of the society. A good number of research works have been undertaken
by individual researchers and institutions invariably dealing with different
aspects of housing finance. A brief review of the major studies which are
particularly pertinent for the present study is attempted here.

In the past years academicians, professionals and
journalists have conducted research or written articles on issues of housing
finance. A comprehension of these research works is essential in order to
develop conceptual clarity of explored areas and also build insight into areas,
which have been inadequately captured by previous empirical researches. This
chapter deals with some of the studies, which help to generate insight into
housing finance growth and its impact.

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Deepak Parakh (1998)1, in his article, “Housing and Financial
Intermediation, Operational Links and Private Sector Initiatives in Indian
Context”, argues that a formal housing finance system must be able to help a
household to make investment in housing and must bring affordability which
enables a more efficient restructuring of resources in the economy. He suggests
that policies for the sector are thus critical for housing development. There
should be a proper linkage between developers and financial institution in the
field of short term bridging finance and real estate information. He also
emphasizes the bridge between formal and informal organization. Finally, he
concluded that resource mobilization, combined with efficient intermediation,
has become the key ingredient of an effective financial system.

Khurana M.L. (1998)2, in his article titled “The Co-operative
Housing Movement – a Movement for Creating Safer Cities and Improved Social
Life”, stated that the factors contributing to increasing city population are:
more jobs, better civic services, employment opportunities, newer family
formation and shift from rural to city centers, thereby making them centers of
production and consumption. In such popular cities, comprising the poor, are
found higher unemployment, increased and prolonged welfare dependency, rising
crime rate, problems relating to public health etc. He continued that to tackle
these problems, the governments have to drain out scarce resources for
developmental work relating to upkeep of schools, parks, libraries etc, for
promoting societal homogeneity and stability. He also suggested the role of
housing co-operatives as, apart from providing decent houses to its members, it
is to create an environment that is conducive to the fulfilment of the
physical, social, economic and spiritual needs of the members. He concluded
that housing co-operatives have the potential of becoming an effective
instrument of providing an improved social life and making cities safer abodes
of human existence.

Madhusdhanan.V (1998) 3, in his study “State Intervention in Housing
– An evaluation of policy and its impact on the socially marginalized in
kerala”  concentrated on the part played
by governmental and non-governmental agencies in mitigating the housing problem
especially the weaker sections of society in Kerala. He also analysed the
different housing schemes and policies implemented by the government and
evaluated its impact on the socially marginalised people in the state.

Paul Diamond.T (1998)4,  in his study “Role of Housing Finance Institutions in National Housing” evaluated
the housing shortage in the country and suggested the role of the HFIs in
national housing. His suggestions include: introducing flexibility in designing
products and systems, development of mortgage market and development of
suitable products to satisfy wide range needs of borrowers (product range). He
also emphasized the governments’ role as facilitator by creating an ‘enabling’
environment to remove constraints in housing activity and expand basic services
to support standardization and up gradation of the housing stock.

Avadhani V.A. (1999)5, in his study, “Marketing of financial
services”, describes the institutional set up of housing industry, which
consists of NHB as the apex institution, HDFC, HUDCO and Banks. The housing
finance policy aspects, industry background, sources of funds, market for
housing finance, recent developments and regulation of HFCs are highlighted by
him. The novel method of raising funds by HFCs i.e., securitisation, is also
dealt with.

Dangwal R.C. (1999)6, in his article, “Housing Finance in India:
Myth and Reality”, evaluated the performance of various financial institutions
and their different housing finance schemes and assessed the further need of
finance in order to fill up the gap between the demand and supply of housing finance
in India. He arrived at the following 
conclusions: –

a) The special
scheme designed to provide housing finance at low interest rate (4 percent) to
SC and ST population by HUDCO was a good effort, but the fund allocation to it
was negligible.

b) Though the
private sector is dominant in housing finance, it has not measured up to the
challenges of demand and need.

c) Housing is not a
problem for rich, it is a problem of economically poor and middle class
families and the strategy has to be formulated in consideration of the poor,
and separate allocation of funds should be made for the poor.

Sivalingam.T (1999)7, in his work, “A Study of the Performance of
Multi-Agency Housing Finance Institutions with particular Reference to HDFC,
LIC and Housing Co-operatives”, analysed the different loan schemes of HDFC,
LIC and Housing Co-operatives. He also analysed the performance of the formal
housing finance institutions. He concluded that the proportion of investment in
public sector housing has declined while the same in the private sector has
increased. A beneficiary analysis was also made to elicit the perception of the
borrowers about the performance of the institutions. His main finding was that
the borrowers of all the three housing finance institutions were not satisfied
with regard to the rate of interest charged by them. Further, he observed that
the behaviour of the officials of the housing co-operatives was not
appreciable.

Gireesh kumar G.S. (2000)8, in his study, “Primary Housing Co-operatives
in Kerala – An Evaluative Study”, assessed the financial performance of PHCs in
Kerala and evaluated their effectiveness in granting housing loans to members.
He also analyzed the views of member beneficiaries and managerial personnel
with regard to the various aspects of housing loan and examined the problems
confronted by PHCs. He suggested implementation of professionalism in
management and reduction in the proportion of share linking.

Hendershott et al. (2000)9, in their study, “Household leverage and the
deductibility of home mortgage Interest: Evidence from U.K house purchasers”, examined
the impact of phasing out of home mortgage interest deduction from taxable
income for home buyers on borrowers’ decision on the amount of debt they were
willing to take. The study is based on a sample of 117,000 home loans in the UK
over the period from 1988 to 1998. The researchers found that removal of
interest deductibility resulted into borrowers reducing the initial
loan-to-value ratios and that this effect varied with household age, loan size,
and tax bracket.

Koshy George (2000)10, conducted a study “Housing Finance for the
Salaried Class in Kerala and Its Impact on the Development of the State” among
the salaried class in Kerala and examined their house construction activities,
and the proportion of their investment in housing. He examined the socio-economic
impact due to the drainage of funds to other states in respect of employing
labourers from other states and importing building materials from other states.
This drainage has affected the economic development of Kerala to a great
extent.