The central bank said yesterday that targeted credit control measures would be more appropriate than a hike in policy rates to put rising real estate prices in check.
The bank declined to comment yesterday when asked whether it would raise interest rates to tighten liquidity in the real-estate market, only saying it would have to consider other factors such as inflation and economic recovery.
“Raising monetary policy rates will have an all-around impact on the economy,” central bank Deputy Governor Yang Chin-long (楊金龍) said during a question-and-answer session in the legislature.
Yang said it would be better to adopt selective credit controls — measures to restrict certain types of credit to achieve economic targets — as the economy has yet to fully recover.
“Targeted macro-prudential measures will be more effective,” he said, alluding to policies such as raising property transaction taxes and lowering loan-to-value (LTV) ratios, which are used by lenders to determine the credit risk of mortgages.
Asked whether the bank would raise interest rates in the short run to cool the overheating property market, Yang kept a low profile, saying that would be decided at the its next quarterly policy meeting on March 25. Even so, the central bank has been mopping up excess liquidity in the market on a daily basis through its open market operations, he said.
Central bank data showed that the balance of negotiable certificates of deposit as of Tuesday was a record-high NT$6.27 trillion — an indication that the bank was using open-market operations to absorb excess liquidity in the market.
Aside from that, the nation’s interbank overnight call loan rate, the rate banks charge on overnight loans to their counterparts, edged up to a 10-month high of 0.123 percent yesterday from Tuesday’s 0.118 percent.
In a joint effort to rein in skyrocketing real estate prices, Financial Supervisory Commission Chairman Sean Chen (陳冲) said at the same legislative session yesterday that the commission would focus on ensuring price information transparency to guide consumers.
Chen said the commission would ask the semi-official Joint Credit Information Center (聯合徵信中心) to collect information on real estate transaction prices across the country within three months.
He said that having the Ministry of the Interior publicize property transaction details — including average house transaction prices, LTV ratios and loan repayment terms — would help ensure fair property prices.
Council for Economic Planning and Development Chairman Tsai Hsun-hsiung (蔡勳雄), who is also opposed to raising interest rates to solve the problem of soaring housing prices, said policies should aim at curbing real estate prices in certain areas such as Taipei City instead of using a blanket measure to restrain rising property prices.
Moreover, Tsai said that as nearly 80 percent of houses in Taiwan are residential units, houses purchased for the purpose of investment should be taxed at a higher rate than residential ones.
Other measures should also be taken to prevent leveraged speculation in the real estate market, he said.
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