Residential mortgage-backed securitization in Asia: The Singapore experience

Abstract

Securitizing residential mortgages has been used effectively to manage mortgage related risks like interest rate risks, credit risks, funding risks and sector concentration risks by financial institutions in many Asian countries. However, in Singapore, development of the residential mortgage-backed securitization (RMBS) market has been slow, despite strong support from the government of Singapore via revising securitization guidelines and making changes to policies that are favorable for RMBS development. Currently, an excess supply of liquidity and a perceived loss in the longterm relationship with the existing mortgagors/clients are the two main barriers to banks in securitizing their residential mortgages.