Minister of Finance Shea Jia-dong (許嘉棟) attempted yesterday to scotch media speculation concerning the amount to be allocated to first-time homebuyers to provide them with low-interest preferential mortgage rates.
Shea called figures of NT$300 billion bandied about by the media "highly exaggerated."
Yesterday a national business daily reported that the Executive Yuan was planning to revive the long-moribund real estate market with a three-fold plan: to provide between NT$100 billion and NT$300 billion in government-subsidized loans to homebuyers, lower the required downpayment on homes from the current 30 percent to between 10 percent and 15 percent, and to provide additional housing loans for younger buyers.
According to the report, the total balance of the preferential mortgage loans is expected to reach NT$300 billion.
Shea said yesterday that a meeting held by the Executive Yuan on Monday reached only a consensus on the issue of the guaranteed credit system on home loans (房屋貸款信用保證制度). While the new administration intends to provide guaranteed credit in order to lessen the burden on would-be homebuyers, there has been no agreement on whether preferential mortgages would be offered, and for that reason no conclusion has been reached on the size of the budget needed to fund such a plan.
Premier Tang Fei (唐飛) is expected to announce details of the new policy today when he holds a meeting with construction companies from central Taiwan.
Shea said that the government's ability to assist with home loans "depends on the government budget and [that the subject would] require further discussion.".
The provision of preferential loans, to be provided by the central bank and postal savings bank, was floated early this year as part of President Chen Shui-bian's (陳水扁) "3-3-3 policy" campaign platform promise.
It has been widely seen as a means of stimulating the sluggish real-estate market.
Real-estate industry analysts have recently estimated that about 1 million houses and apartments around the island are either unsold or vacant, putting tremendous pressure on both the construction and real-estate industry.
Wei Chi-lin (魏啟林), secretary-general to the Cabinet, said "the new administration is planning to provide insurance premiums from its budget in order to establish a guaranteed credit system on housing loans and transfer the [default] risk to international reinsurance companies.
The campaign promise of providing first-time homebuyers with a 3 percent mortgage rate has been difficult to implement due to the government's fiscal deficit. Analysts estimate that only 10,000 first-time homebuyers could benefit from the measure.
Wei, therefore, suggested the government instead offer the guaranteed credit system. This would lower the downpayment amounts needed for first-time home-buyers, but also increase demand for vacant properties by putting them more easily within buyers' reach.
According to the report, the mortgage rate provided by the Postal Savings will be the one-year Postal Savings rate (currently at 5.35 percent) plus 1 percentage point, minus 0.85 of a percentage point which will be subsidized by the government.
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