S. Korea's MBS issuance logs double-digit fall in Q1

South Korea's issuance of mortgage-backed securities (MBS) logged a double-digit fall in the first quarter this year due to weaker demand for home-backed loans, financial watchdog data showed Wednesday.

The sale of the MBS, issued by the state-run Korea Housing Finance Corp. to securitize home-backed loans, came in at 6.3 trillion won (5 billion U.S. dollars) in the January-March quarter, down 29.9 percent from a year earlier, according to the Financial Supervisory Service.

The double-digit reduction stemmed from lower mortgage demand, caused by higher borrowing cost.

South Korea's central bank hiked its policy rate by a quarter percentage point to 1.25 percent in January, after lifting it by 25 basis points in August and November last year. The bank raised the rate further to 1.50 percent earlier this month.

The issuance of asset-backed securities (ABS), including the MBS, stood at 10.9 trillion won (8.7 billion U.S. dollars) in the first quarter, down 20.2 percent from a year earlier.

The ABS issuance by financial companies gained 6.6 percent to 2.4 trillion won (1.9 billion U.S. dollars), but the ABS sale by industrial companies fell 8.1 percent to 2.2 trillion won (1.8 billion U.S. dollars) in the cited quarter.