International mortgage backed securities, Financial Management

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International mortgage-backed securities are the mortgage-backed securities that are issued in a country by a non-domestic entity. With limited size of the Indian Mortgage-backed securities, leading housing finance companies and banks engaged in home finance are looking at the option of tapping the overseas mortgage-backed securities. A comparison between the US and Indian market shows that more than 46 percent of housing loans in the US are securitized, against three percent in India. Access to overseas investors offers cheaper and diversified funding. It also provides larger size funds for longer maturity periods. Large housing finance majors in India have indicated their desire to target international investors in the United States and the United Kingdom. But unless domestic originators of MBS provide adequate data and follow best practices, they will find it difficult to tap international investors. Domestic housing majors eyeing the international MBS market will also need to look into regulations like foreign direct investment and how they need to hedge the funds received in dollars when the same is brought back into the country.


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