Some evidence on this question is provided in Slide 7, which shows illustrative initial monthly mortgage payments for a median-priced house for different types of mortgages. 14 The interest rates used in calculating these payments are actual averages for prime borrowers for the period from 2003 to 2006, as provided by Freddie Mac.
Flexibility not forbearance Finally, let me end on a current concern that pertains to the RBI’s regulation that is not unrelated to the issues discussed in this lecture. Today, a large number of industries are getting together with banks to clamour for regulatory forbearance. They want the RBI to be “realistic” and postpone any recognition of bad loans.