The sale of MBS, issued by the state-run Korea Housing Finance Corp. to securitize mortgage loans, amounted to 9.1 trillion won (8.1 billion U.S. dollars) in the January-March quarter, down 49.4 percent from a year earlier, according to Financial Supervisory Service (FSS).
It came as demand weakened for the fixed-rate mortgage loan, provided by the government. The record-low policy rate increased demand for the floating-rate home-backed loan.
The country's central bank has left its key rate unchanged at an all-time low of 0.50 percent since May last year.
The issuance of asset-backed securities (ABS), including the MBS, stood at 13.7 trillion won (12.2 billion U.S. dollars) in the first quarter, down 39.7 percent from the same quarter of last year.
The ABS sale by financial companies gained 6.4 percent in the quarter, but the ABS issuance by industrial companies declined 10.8 percent.