This problem is more acute for low income families seeking affordable houses. Need for long-term debt market Housing constitutes a long term asset for a large segment of population in rural and urban areas. As debt markets are not very deep, access to long-term funding for housing finance institutions is difficult.
Most banks use their shortterm funds from deposits and deploy these funds in long-term housing loans, thereby creating an asset liability mismatch. Reserve Bank of India has cautioned banks of the dangers of borrowing short and lending long. To mitigate such problem, in some countries, banks have been permitted to float long-term mortgage bonds to match their mortgage assets.