The government is considering to keep providing low-interest loans for first-time home buyers as a means of stimulating the property market, as the NT$300 billion (US$9.59 billion) that has been allocated to preferential loans is expected to run out by the end of next month, Premier Frank Hsieh (
Hsieh made the remark while meeting with members of the Council for Industrial and Commercial Development (
The central bank has granted a total of NT$1.38 trillion in preferential loans since 2000. Of the NT$300 billion the bank made available in May last year, only NT$60 billion is left, according to the bank.
The Cabinet said last year it would not allocate any further funds, as the real estate market seemed to be recovering steadily. But the sector did not perform as well as expected this year due to slowing economic growth, which has given rise to speculation that Hsieh might extend the low-interest loans to boost the market.
Bolstered by this positive news, construction stocks rose as high as 3.26 percent during yesterday's morning session on the Taiwan Stock Exchange, before paring gains and closing up 1.95 percent over concern over a possible interest-rate hike by the US Federal Reserve. Huaku Construction Co (華固建設) rose 4.73 percent to NT$34.35, while Cathay Real Estate Development Co (國泰建設) closed 3.25 percent higher at NT$14.30.
But Victor Chang (張欣民), director of the research and development division of Sinyi Real Estate Inc (信義房屋), Taiwan's biggest real-estate agency, said the incentive will be of little help if subsidiary interest rates remain at current levels.
The central bank only subsidizes 0.125 percent of the interest payable by first-time home buyers under the preferential scheme, which is far from the 0.85 percent offered in 2000 and thus not that effective in encouraging consumers to buy, Chang said.
Besides, fierce competition has resulted in banks offering loans at rates similar to or even lower than that of the preferential scheme, which makes the government loans less attractive to consumers, he added.
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