Housing Finance Corporation Mortgage-Backed Securities Foreign Investment Amount 935 Billion KRW... 167% Increase Compared to Previous Year

MBS and Government Bond Yield Status (As of the 22nd). Average Market Valuation Yield of Four Private Market Valuation Firms. Photo by Korea Housing Finance Corporation

[Asia Economy Reporter Song Seung-seop] Korea Housing Finance Corporation recorded foreign investment in mortgage-backed securities (MBS) of 935 billion KRW this year.

According to the 'MBS Foreign Investment Attraction Performance' data from the Housing Finance Corporation on the 28th, the annual investment amount this year was 935 billion KRW, an increase of 167.1% (585 billion KRW) compared to the previous year (350 billion KRW). Considering that 94% of foreign bond investments are concentrated in government bonds, the expansion of domestic MBS foreign investment is a remarkable achievement, according to the Housing Finance Corporation.

MBS refers to securities issued based on bonds that financial institutions have long-term loans secured by housing collateral. They are characterized by low default risk and higher returns compared to the repayment safety level of government bonds.

The Housing Finance Corporation cited the creation of investment conditions as the background for the expansion of foreign investment. From this year, a competitive bidding system was introduced allowing foreign investors to be allocated MBS investment limits from their home countries and invest at any time. Last year, there was a limitation of one-time investment due to the non-competitive method of allocating MBS volumes through separate agreements.

The Housing Finance Corporation explained that increasing foreign investors' understanding of the unique processes of MBS, such as the interest rate determination process and bidding method, which they were unfamiliar with compared to government bond investments, was also effective. Additionally, the Corporation has actively promoted the advantages so that some foreign government bond investments can be replaced with MBS.

Choi Jun-woo, President of the Housing Finance Corporation, emphasized, “As of November, the Corporation’s MBS issuance scale is about 32 trillion KRW, which is the largest scale issued domestically except for government bonds and monetary stabilization bonds. The funds raised through MBS issuance are used as resources for home purchases by ordinary citizens with real demand.” He added, “We will continue to diversify funding channels by attracting foreign investment and grow into a global housing finance institution.”