The state-run Korea Housing Finance Corp. is planning to more than triple its sales of residential mortgage-backed securities (RMBS) to investors.
According to a Bloomberg News report, the Korea Housing Finance Corp. expects to sell as much as $27 billion in RMBS next year. The agency is the only entity that currently issues RMBS in Korea; the last non-government lender to sell RMBS was Standard Chartered Korea Bank Ltd. in 2008.
‘Sales of RMBS will continue to rise as more local lenders are providing mortgages better fit for securitization,’ says Seo Jongdae, the agency's CEO.
Kim Young Do, research fellow at Seoul-based Korea Institute of Finance, told Bloomberg News that this development will help strengthen the nation's housing finance environment.
‘We need to develop the securitization market here to bolster the fixed-rate, long-term loan structure over the next five to 10 years,’ says Kim. ‘As time goes by, banks will find out what's the best instrument for the Korean market: RMBS like in the U.S. or covered bonds like in Europe.’