亞太金融市場報告 Residential Loan in Taiwan (influence by “Subprime Mortgage”) 第十組 J 4970E014 黃承廣 4970E050 王建智

Factors crises Class A U.S. real estate mortgage market has become Fannie Mae and Freddie Mac, two giant oligopoly real estate market, forcing smaller companies to develop new real estate market. When prices rise rapidly, the already rare event of default; even if default happens, real estate companies can still sell the collateral with a higher price to repay the loan. Therefore, real estate firms tended to underestimate the credit risk of subprime mortgages, and charge lower interest on loans.

U.S. low interest rate environment, so that the lender re-rapid increase in the number of loans, resulting in real estate companies are expanding operations to meet the needs of the lender. Selectivity is one of the characteristics of goods to repay the monthly repayment amount can be higher than the actual interest costs lower, we call negative amortization, resulting in rising loan balance

Maturity of the credit derivatives market has also contributed to high-risk real estate securities issued The low growth rate of real estate prices do not make the secondary mortgage market once default rates increased, but also affected the primary mortgage market and the government assisted loan market

Today, the U.S. housing market, subprime lending issues, as Taiwan's real estate credit market model. Since early 2006 the issue of credit card and cash card, the majority of our banks that focus on residential real estate markets. With the increasing competition on the market, low interest rates, and the first time in ten years the real estate market recovery, residential real estate market today, Taiwan and the United States a few years ago the real estate market conditions can be quite similar.

Basel to encourage the traditional investors in high-risk activities. Today, the new Basel II allows banks to assess credit risk and decided to risk capital in different commodities. Therefore, the competent authority point of view, the bank can effectively assess the efficiency and rationality of the model, especially for the evaluation of new products, such as: sub-prime loans or optional repayment loans, it is particularly important.

By Freddie Mac and FHA in the management of credit risk and stress often use random simulation tests to determine the new product venture capital adequacy ratio and risk-based pricing, in order to protect the company's financial health and a reasonable profit. However, in a short period, the majority of our banks may continue under the new Basel II standardized approach.

If the status quo remains unchanged, to encourage banks to engage in high-risk sexual activity incentive still exists. Therefore, in order to avoid excessive risk exposure to banks in which goods, the authorities must have a rigorous review and approval of new real estate and structured products capabilities. All of these may apply to assist in the prevention of similar domestic U.S. sub-prime storm.