To relieve some of the economic burden on the younger generation, the legislature’s Finance Committee yesterday requested the eight state-run banks to keep their interest rates for mortgages for young people unchanged for up to two years, if the policy rates are raised by no more than 0.25 percentage points.
The committee made the decision after the central bank warned people with mortgages on Thursday last week to keep an eye out for interest rate changes, spurring market speculation that it could raise benchmark rates in the near future.
“Once the central bank raises the policy rates, Taiwanese banks may follow by raising their mortgage rates,” one of the committee’s conveners, Chinese Nationalist Party (KMT) Legislator Lu Shiow-yen (盧秀燕), said during a legislative question-and-answer session.
Based on the latest data from the Directorate-General of Budget, Accounting and Statistics (DGBAS), workers under 30 years of age earned an average of NT$427,200 (US$14,400) last year, with many university graduates still earning a very low starting salary of NT$22,000 a month.
The statistics made lawmakers worry about the heavier economic burden on young people from mortgage interests following a possible rate hike.
Lu, together with KMT collegues Sun Ta-chien (孫大千) and Lo Ming-tsai (羅明才), requested the eight state-run banks to maintain interest rates on mortgages for youth for two years, if the central bank boosts the rates by no more than 0.25 percentage points.
Currently, the eight state-run banks in Taiwan offer a 1.72 percent annual interest rate for the first two years for young people applying for mortgage for the first time, followed by a rate of 2.02 percent from the third year, data offered by the ministry showed.
A total of 109,533 people have applied for mortgages.
Minister of Finance Chang Sheng-ford (張盛和), who is also one of the members at the central bank’s board, said the board did not discuss rate hikes at its meeting on Thursday last week, so “the public might have read too much into [central bank Governor] Perng’s [Fai-nan (彭淮南)] comments.”
In related news, Chang said the Ministry of Finance is planning to unveil its revised version of the so-called “luxury tax” by the end of next month.
The ministry will not see the revised luxury tax as a primary draft in this legislative session, considering the sluggish momentum of Taiwan’s economic recovery, Chang said.
However, slight changes may be necessary to the imposition of the luxury tax after review, he added.