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2002. 7. 5

Mortgage Financing Market in Korea and Major Issues. 2002. 7. 5. Kookmin Bank. Contents. 1. Trends in Housing Market 2. Current Performance of the Housing Market 3. Current Situation of the Mortgage Financing Market 4. Trends of the Mortgage Financing Market

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2002. 7. 5

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  1. Mortgage Financing Market in Korea and Major Issues 2002. 7. 5 Kookmin Bank

  2. Contents 1. Trends in Housing Market 2. Current Performance of the Housing Market 3. Current Situation of the Mortgage Financing Market 4. Trends of the Mortgage Financing Market 5. Characteristics of the Recent Mortgage Financing Market 6. Major Issues for the Future

  3. 1. Trends in Housing Market (1995=100) Finance Crisis High Housing Supply Period Housing Price Index Change in Economic Paradigm Year Source: Korea National Statistical Office 1

  4. 2. Current Performance of the Housing Market • Pattern changes in housing demand - Housing Market: Supply Oriented Market Demand Oriented Market - Housing Demand: Quantity  Quality Changes in Household and Housing Stock (Unit: 1000) Source: Korea National Statistical Office 2

  5. 2. Current Performance of the Housing Market (con’t) • Increasing demand for mortgage loans - Increasing purchasing capabiity: continued reduction of PIR continued increase of LTV - Vitalizing MBS Market  increasing demand for mortgage loans Trends of PIR andLTV Percent Source: Kookmin Bank 3

  6. 3. Current Situation of Mortgage Financing Market • Rising competition for expanding mortgage loan extension among financial institute - Increased market share of commercial bank - Decreased market share of non-bank financial institutions Trend in the Share of Mortgage Market (Unit: %) Source: Kookmin Bank 4

  7. 4. Trends in Mortgage Financing Market • Fast grwoth of private mortgage financing market - Increased No. of mortgage loan providers since privatization of H&CB after currency crisis Trend of Household Loan Source: Bank of Korea 5

  8. 4. Trends in Mortgage Financing Market (con’t) • Interest rate cuts toward stability - Increased availability of mortgage loans - Increases potential for debtors to service mortgage debts % Trend in Various Interest Rate Source: Bank of Korea 6

  9. 5. Characteristics of the Recent Mortgage Finacing Market • Relatively smaller scale of mortgage financing market than advanced economies • Underlying risks of short term mortgage loans extended by financial institutions • Early debt servicing risks from increasing competition among loan providers Character of Primary Mortgage Market Source: Kookmin Bank 7

  10. 6. Major Issues for the Future • Institutionalizing market discipline for private mortgage market - Stalling direct fund support by public finance for areas conjoining with private sector • Revamping private mortgage financing market through borrowers support - Taxation exemption, Mortgage guarantees and Insurance, and others - Vitalizing mortgage loan insurance system • Vitalizing secondary mortgage market • Development of statistical data for efficient risk management - Credit information, LTV, early debt servicing ratio, deliquency ratio, and others 8

  11. Thank You

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