A well-functioning housing finance system serves as a lynch-pin connecting the housing sector with the financial sector. Until recently, Korea’s Housing finance sector has been utilized as an instrument of national housing policy while the basic market principles governing resource mobilization and its allocation were repressed. It was routinely claimed that long term housing loans should be provided at below market interest rate to be affordable, such a policy stance and the public perception were not conducive to the development of a market based housing finance system