1. Benefits of PMRC Mortgage Lenders
Medium to long-term funding for banks, mitigating maturity mismatch risk.
Insurance
Micro level – If lender faces liquidity issues during the life of the loan, lender can refinance existing loans.
Macro level – Countercyclical role in times of liquidity crunch in the market.
Net result – Mitigate liquidity risk in mortgage lending.
Enables banks to grant fixed rate mortgage loans by obtaining fixed rate funds from PMRC. Fixed rate mortgage loans increase affordability and reduce incidences of defaults by borrowers.
Promotes mortgage market soundness.
Lower funding cost vs bonds issues by individuals banks.
Enables banks to diversify their sources of funds for mortgage lending.
If maturity of mortgage loans is increased from 15 to 20 years. Impact
2% reduction in monthly instalment.
Banks can increase mortgage rate 1 – 1.5%
Borrowers will still pay
Lower funding cost vs bonds issues by individuals banks.
Scale effects.
Regulatory treatment of PMRC bonds.
Prime standing of PMRC.
Limited intermediation cost.
Potential for market liquidity

2. Benefits of PMRC B. House buyers C. Government and the Economy
Easy access to long-term housing loans at reasonable cost.
Obtain attractive and affordable housing loan packages.
C. Government and the Economy
Helps to achieve the Government’s policy of encouraging home ownership.
Makes housing loans more affordable to the middle and low income groups, with minimum or no subsidies being incurred by the Government.
Encourages property development by developers and related spin-off effects such as creation of employment and stimulation of the local economy.
D. Capital Market
PMRC’s bonds will provide high quality papers with a slight yield pick-up (compared to PIBs) to pension funds, insurance companies mutual funds and even banks with large surplus of funds.
Paves the way for other corporations to raise funds in the local capital market.
Creation of a long-term yield curve for corporate bond issues.
Provides an opportunity for bond dealers to undertake transaction on a large scale.