The Ministry of Finance yesterday announced a preferential home mortgage program with competitive loan interest rates for first-time homebuyers between the ages of 20 and 45 starting on Thursday next week in an effort to lessen the mortgage pressure on young people.
The government plans to invest NT$200 billion (US$6.5 billion) in the new home loan scheme, which is expected to benefit at least 50,000 people, with each eligible homebuyer able to apply for up to NT$5 million in loans.
“We hope the new program will help those in need,” Deputy Minister of Finance William Tseng (曾銘宗) told a media briefing, saying that anyone without properties registered under his or her name could apply regardless of their earning ability.
The preferential youth home loan program, which will be executed by eight state-run banks, offers an interest rate of 1.5 percent for the first two years and 1.8 percent starting from the third year with a repayment period of up to 30 years, the ministry said.
Tseng said the loan interest rates were lower than market-based mortgage rates of at least 1.62 percent for the first couple of years and 2.2 percent starting in the third year.
The new home mortgage scheme will not be retroactive for properties bought before Dec. 1 — the starting date of the program — and cannot be applied for concurrently other government home loans, the ministry said.
Chang Chin-oh (張金鶚), a land economics professor at National Chengchi University, however, said the new scheme would only benefit those who already have plans to purchase houses and encourage more people to buy houses when home prices are at high levels.
“This will further fuel already high home prices and profit construction companies,” Chang said by telephone, criticizing the timing of the government’s announcement of the youth home loan program ahead of the five special -municipality elections on Saturday.
Although the new scheme offers more competitive interest rates, it doesn’t help those who can’t afford the down payment on a house, Chang said, adding that the age limit of the program was not fair to older first-time homebuyers.
The ministry, the central bank and the Financial Supervisory Commission had reached a consensus to implement the youth home loan plan in a closed-door meeting on Nov. 19 and downplayed its impact on property prices.
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