Land Bank of Taiwan (土地銀行), one of the nation’s largest home loan providers, yesterday said it has eased rules on extending mortgages to home buyers.
The rules, which became effective this month, allow home mortgage applicants with NT$600,000 (US$19,666) or more in annual income to borrow 80 percent of their home’s value, the bank said.
The previous minimum annual income for a home mortgage seeker for the same conditions was NT$800,000.
Clients who already own a home and want to buy more are also eligible for the eased mortgage rules, the bank said.
However, the debt-to-income ration for a single-home mortgage seeker with no other loans remained unchanged at 800 percent, while the ratio for a married couple applying for a home mortgage remained unchanged at 1,200 percent, the lender said.
For example, a home loan applicant who earns NT$600,000 per year could buy a home valued at NT$10 million, but the maximum mortgage for that home would remain at NT$4.8 million instead of NT$8 million due to the debt-to-income ratio, the bank said.
For a married couple with a combined income of NT$1.2 million per year, the maximum home mortgage would be NT$14.4 million and the loan would meet the new rules, as the amount would be 80 percent of a new home valued at NT$18 million, it added.
Due to the debt-to-loan ratio restrictions, the eased mortgage rules are expected to help home buyers in central and southern Taiwan, where home prices are relatively low, the bank said.
Market analysts said the move came amid declining speculation on the local property market following the implementation of government measures designed to rein in property prices.
One of the measures is a new property-related tax scheme that took effect on Jan. 1 last year, which last year dragged down housing transactions nationwide to a low of 245,398 units.
The tax scheme imposes a capital gains tax of up to 45 percent on people who sell second homes withing a certain period after the date of purchase.
However, the local property market has shown signs of stabilizing to some extent after a period of consolidation, as home buyers seeking residences for their own use have returned to the market, the analysts said.
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