RESIDENTIAL FINANCING

Abstract

Residential properties are a good hedge against inflation being more profitable and less risky, compared broadly to stocks and shares. However, property purchase entails a string of decisions to make; after all, this is one of the largest financial transaction a family commits itself to. Similarly choosing a loan arrangement is equally critical as the consequences can last for generations. This study was undertaken by identifying the needs through, first, investigating how borrowers base their selection of loans on and secondly, considering loan features pertaining to that decision-making process. The research involved evaluating the local innovative financing and the possibility for innovative financing. The results showed that each package focused on one particular aspect of a borrower's need, thus, indicating their inadequacies. Hence, a more comprehensive and innovative package, ' Adjustable-rate Mortgage', was discussed. Many borrowers welcome new ideas that may better cater to their needs, whereas financiers are generally passive and not keen on exploring more creatively packaged schemes which may help stimulate the present declining demand.