Mortgage and MBS-A Case of Shanghai

The paper divided to 6 parts. The first one introduces the history and current status of commodity housing. Shanghai has a fast growing and bright forecasting. It follows with a discussion on Shanghai housing bubble, which involve the reason, implications and reactions of government, normal purchaser and speculators. The second part forces on mortgage market. It describes the process of application, the interest rate and its effect, the methods of different payment. Then it talk about unique Chinese Public Accumulated Fund, which is a beneficial programme to help residence purchasing house. After that, it tellsthe story of QunZu (i.e. to lease one flat to excessive tenants), and discuss the implication of government's newly releasing policy. The Third one is about the risks of MBS, including prepayment, default, interest, credit and policy aspects. It analyse the reason, implication and give out solutions. The forth part is a case study of CCB-JianYuan This programme is the first attempt in MBS. Although the plan looks successful, it is argued that the banks may not have motivation to participate in the real world. Also, the institutional investors are restricted by the regulations. The fifth one is an analysis of the feasibility of Shanghai MBS. It start with the Macro Economy environment analysis, considering the demand and supply of the market, evaluating the development of the mortgage market, and also overview the security market. Shanghai has a fast growing pattern in those aspects. It then refer to US sub-prime mortgage crisis. The final part are some recommendations for price setting and asset pool selection. If Shanghai accept MBS in the future, it would be useful to design the financial product