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Refinancing Cycle

Initial step is for a borrower to take out a loan from a lender; in return the borrower will provide regular repayments to repay the loan principal plus interest.

The borrower also provides collateral in the form of a mortgage over the property to be purchased, constructed, refinanced and/or renovated.

Second step is for lender to get it refinanced with TMRC. TMRC will refinance the mortgage loans of banks with recourse to the banks.

The third step is for TMRC to raise its own funding by going to the capital markets and issuing bonds. It will issue very standard corporate bonds which do not involve any pass through of the credit risk attached to the mortgages. TMRC acts as a simple intermediary between mortgage lenders and the capital markets. By using its size and credit worthiness, TMRC will be able to raise funds at a cheaper rate than any bank would be able to do if acting alone. This is attributable to the strong shareholders, strong capital base, excellent quality of assets in its books and the fact that TMRC is regulated by BoT. This is one of the key benefits of TMRC especially for small and medium size banks who would not be able to access capital markets on terms which would make economic sense.

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