The nation’s eight major state-run banks extended NT$63.599 billion (US$1.97 billion) in preferential housing loans for young people last month, up 21.84 percent from April and 556.54 percent from a year earlier, data released by the Ministry of Finance showed yesterday.
The figure marked the highest since August last year, when the government provided additional support for first-time buyers, ministry data showed.
The eight banks approved 8,273 preferential loan applications last month, up from 6,879 in April and 1,791 in May last year, reflecting strong interest from first-time buyers and solid demand for self-occupied homes, the data showed.
Photo: Hsu Yi-ping, Taipei Times
The eight are Bank of Taiwan (臺灣銀行), Land Bank of Taiwan (土地銀行), Hua Nan Commercial Bank (華南銀行), Taiwan Cooperative Bank (合作金庫銀行), First Commercial Bank (第一銀行), Chang Hwa Commercial Bank (彰化銀行), Mega International Commercial Bank (兆豐銀行) and Taiwan Business Bank (臺灣企銀).
Under the instruction of the Ministry of Finance, the eight banks in August last year began to provide additional support to potential homebuyers after the banking sector’s average mortgage rate exceeded the 2 percent mark.
The banks refined four major areas of the preferential loan program to offer more flexible conditions for loan applications compared with a previous similar scheme, such as increasing the maximum loan amount from NT$8 million to NT$10 million, extending the loan period from 30 to 40 years, and expanding the grace period for repayment from three years to five years.
Together, the government and the banks subsidize 0.375 percent of the mortgage rates — allowing people to buy their first home at a favorable interest rate of 1.775 percent, with the interest subsidy lasting for three years until July 31, 2026, the ministry said.
From August last year to last month, the revised program approved 57,980 preferential loan applications totaling NT$428.1 billion, ministry data showed.
That has helped support the housing market, with average housing prices rising more than 10 percent year-on-year during the first four months of the year after growth slowed in the second half of last year, real-estate brokerages have said.
With housing transactions and investment heating up, the central bank last week raised the reserve requirement ratio by 0.25 percentage points to soak up about NT$120 billion of liquidity in the market. The monetary regulator also implemented a sixth round of selective credit controls to cool the housing market.
The ministry on Tuesday also instructed the eight state lenders to tighten reviews of mortgage applications and requested applicants to sign affidavits stating that they would not lease their house or use it for investment purposes or risk having their favorable lending terms revoked and obliging them to return the interest subsidy.
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