Feasibility of Mortgage Securitization in Emerging Market Economies

The study aimed to assess the feasibility of mortgage securitisation as a housing finance mechanism in Zimbabwe. The main problem under investigation was to determine the applicability of mortgage securitisation as a solution to the housing crisis in Zimbabwe. An exploratory study was carried out on the building society sector to establish its readiness to embrace the development of mortgage securitisation. The study used both primary and secondary data obtained from the four building societies. Primary data was obtained through detailed personal interviews with experts from each building society. The research findings were not consistent with the proposition that the development of mortgage securitisation is feasible in Zimbabwe. It was observed that the two major preconditions of mortgage securitisation namely, a stable macroeconomic environment, and a vibrant and competitive primary mortgage market, are not present in Zimbabwe. The adverse macroeconomic conditions characterized by high inflation, high interest rates, skyrocketing prices of residential properties, and eroded purchasing power of consumers, have destroyed the primary mortgage market in Zimbabwe.