Troll_Bait
Joined: 04 Jan 2006
Location: [T]eaching experience doesn't matter much. -Lee Young-chan (pictured)
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 Posted: Mon Mar 31, 2008 2:08 am Post subject: Korea Could Face Mortgage Crisis: Report |
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http://english.chosun.com/w21data/html/news/200803/200803310020.html
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Korea Could Face Mortgage Crisis: Report
Korea could suffer a bursting property bubble in the manner of the U.S. subprime mortgage crisis since mortgage-backed loans account for a hefty portion of total loans at domestic financial institutions, a report warns.
The Hyundai Research Institute in a report Sunday said mortgage-backed loans account for 47 percent of total bank loans, as loans to small and medium-sized companies in real estate development and construction have surged since 2001. In Japan, just before the housing bubble burst in the early 1990s, banks had only 26 percent of mortgages.
The institute warned of a �hard landing'' for the mortgage market, which would lead to an increase in credit delinquency and a fall in the value of collateral. The bursting bubble would ultimately result in the bankruptcy of financial institutions, the HRI said.
Park Deok-bae, a research fellow at the institute and author of the report, said excessive provision of mortgage-backed loans could cause a Korean version of the U.S. subprime crisis and the Japanese property crash. He urged banks to increase the rate of credit loans to companies in industries other than real estate and construction to prevent this. Construction companies should reduce their business risk from the domestic market by developing overseas markets, he added. |
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