Thu, Apr 22, 2010 - Page 12 News List

Central bank wants mortgage lending limits

PROPERTY PRICES Perng Fai-nan blamed speculators for soaring property prices, and said he is closely monitoring the flow of ‘hot money’ into the country

By Ted Yang  /  STAFF REPORTER

Central bank Governor Perng Fai-nan (彭淮南) said yesterday that the central bank had begun financial inspections on local mortgage lenders this week as part of its effort to rein in property speculation. Perng said the central bank did not intend to suppress the real estate market but called for higher risk control for mortgage lending in its move to tighten credit, legislators told reporters after a closed-door meeting with the governor.

“The central bank has targeted eight to nine local public and private banks, requesting them to set [mortgage lending] limits for property speculators,” Chinese Nationalist Party (KMT) Legislator Lin Te-fu (林德福) said.

Lin quoted the governor as saying that Shining Building Business Co (鄉林建設) offered a floor price of NT$3 million (US$95,290) per ping (3.3m²) for a house near Shilin Residence (士林官邸) in Taipei City, which was “not worth that price” and was “a result of speculation.”

Lin said that soaring housing prices were limited to certain areas, so it was not appropriate to adopt across-the-board measures to curb real estate speculation. KMT Legislator Luo Ming-tsai (羅明才) said that the central bank had stepped up efforts to tighten credit by checking whether the loan-to-value ratio was effectively kept under 70 percent by local mortgage lenders. The two lawmakers made the remarks after a visit to the central bank yesterday.

Shares of Shining Building saw little impact from the central bank’s criticism, rising 0.58 percent to close at NT$34.5 yesterday on the Taiwan Stock Exchange.

The property developer issued a statement last night saying that the company “is incapable of influencing the market” on its own, as the project near Shilin Residence is just one of many of its kind in Taipei City.

Shining Building also denied the project was related to surging housing prices in Taipei City, because it is commercial real estate, not a residential property.

Shining Building said it supported the government’s recent efforts to ease housing prices, but stressed that higher prices in Taipei City were a result of Taiwan concentrating more resources in the city. The company urged the government to pursue balanced regional development in Taiwan in order to solve the problem of high property prices in Taipei City.

Responding to recent fluctuations of the New Taiwan dollar, Luo quoted Perng as saying the exchange rate was still relatively stable and the central bank did not set any benchmarks for the rate. Taiwan’s economy posted a better-than-expected performance in the first quarter of this year, leading international capital to continue flowing into Taiwan, putting pressure on the central bank in its monetary policies, Luo said.

Luo said that foreign investment accounted for over 35 percent of the Taiwanese stock market, with profits of more than US$20 billion over the years, adding that “hot money” in Taiwan had reached levels as high as NT$360 million.

ADDITIONAL REPORTING BY KEVIN CHEN

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