Sat, Dec 13, 2008 - Page 12 News List

Foundation sets fair mortgage rate at 1.975 percent

SHARING BENEFITS Hsieh Tien-jen said that mortgage borrowers with interest rates exceeding 1.975 percent annually should ask for lower rates

STAFF WRITER, WITH BLOOMBERG

The Consumers’ Foundation (消基會) yesterday said a reasonable mortgage interest rate should be no more than 1.975 percent annually, after the nation’s central bank on Thursday cut key interest rates by a surprising 75 basis points.

The central bank’s latest interest rate cut on Thursday was its fifth in two-and-a-half months. It has lowered rates by 1.625 percentage points since September.

However, as the mortgage interest rate was adjusted on a quarterly basis in the past, many borrowers complained that they were not able to immediately benefit from the central bank’s rate cut, the non-profit foundation said at a press briefing yesterday.

The central bank said on Thursday that it decided to cut the rate as inflationary pressure eased, while the risks of a further downturn to the domestic economy are rising.

To alleviate homebuyers’ financial burden, the bank reiterated its call to local lenders to allow mortgage interest rates to be adjusted on a monthly basis.

Meanwhile, the Financial Supervisory Commission also announced on Thursday that local lenders had agreed to extend home mortgage payments by as much as 10 years to help owners who have difficulties repaying loans amid the global recession.

Under the plan, homeowners can apply to banks to extend the mortgage payment period to up to 30 years from 20 years, the commission said in a statement, adding that member banks of the Bankers Association of the Republic of China (銀行公會) have agreed to accept applications for extensions by qualified homeowners until the end of next year.

Even so, the Consumers’ Foundation yesterday unveiled a list showing many local lenders including Hua Nan Commercial Bank Ltd (華南銀行) that were unwilling to lower their mortgage rates in tandem with the central bank’s move.

Foundation chairman Hsieh Tien-jen (謝天仁) said that mortgage borrowers with interest rates exceeding 1.975 percent annually should request lower rates.

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