Mortgage banking market leader SBI Mortgage, which is the only Japanese company listed on the Korean stock exchange, is accelerating its efforts to enter the Korean market.
These days, the Japanese government is supplying unlimited liquidity while maintaining the key rate at zero percent in an attempt to reach a GDP of 50 trillion yen, leading many to expect a housing market recovery. The Korean government is also planning to expand the ratio of fixed-interest housing loans to 30% by 2016 for more favorable market environments.
According to industry sources, SBI Mortgage starts mortgage banking business in Korea in the second half of this year. Then, it becomes the first loan provider not taking deposits in Korea engaged in such business although some commercial banks such as KB Kookmin Bank and Citibank are currently providing conforming loans in connection with the Korea Housing-Finance Corporation. The product has the function of procuring loan funds by converting mortgage bonds into securities, unlike those dealt in by savings institutions.
FLAT35, one of the most well-known products of SBI Mortgage available in Japan, is a 35-year fixed-interest mortgage loan handled by the Japan Housing Finance Agency (JHF). When SBI Mortgage provides a loan to an individual, the mortgage bond is bought by the JHF for conversion into securities. In Korea, most long-term fixed-interest housing loans have the form of conforming loans, which are characterized by the Korea Housing-Finance Corporation securitizing the loans and banks being engaged in the sale as agents.
“For now, we’re mulling over online sale to penetrate the rich market after obtaining the license,” said SBI Mortgage.