The Financial Supervisory Commission and the Ministry of Finance yesterday separately met with domestic banks to make sure they prioritize first-home buyers and honor lending agreements when processing loan applications.
The commission went so far as to indicate it is mulling easing banking rules that currently limit construction and housing loans to 30 percent of a bank’s deposits and debt issuance combined.
Banks have been urged not to withhold funding from first-home buyers or houses they previously agreed to finance after meeting with 13 banks, Banking Bureau Deputy Director-General Roger Lin (林志吉) said.
Photo: Clare Cheng, Taipei Times
The commission is considering excluding loans to first-home buyers, urban renewal projects and related construction work from the regulatory ceiling of 30 percent of a bank’s available funds on hand to help end a cash crunch, Lin said.
Starting from the middle of this month, banks are to update their mortgage operations every two weeks so the commission can gain a better understanding of their construction and house loan data and quantitative loan controls, he said.
Banks should share and publish their mortgage operations online so people know where to apply for loans, he added.
The banking system gained NT$11 trillion (US$341.7 billion) of deposits in the past three years, suggesting there is an extra NT$3 trillion on hand for mortgages, Lin said.
Banks should also make good on their promise to provide loans for newly completed complexes or unsold houses even if loan applicants are not first-home buyers, he said.
The central bank has voiced reservations on the planned deregulation, saying that real-estate lending is approaching a record high of 37.9 percent of total loans and that concentration could squeeze room for financing other sectors.
The Cabinet is mulling cross-ministerial discussions on the matter, the commission said.
Separately, the Ministry of Finance said that the bad loan ratio for mortgages with favorable lending terms stands at a minor 0.04 percent.
The program helped 73,000 people buy their own home between August last year and July, accounting for 9.92 percent of all transactions, rather than 40 percent or higher as critics have claimed, the ministry said.
The ministry also dismissed reports that real-estate lending is getting close to the statutory ceiling, saying the leeway is another NT$1 trillion.
Government agencies would press ahead with the favorable lending terms — including interest rates of 1.775 percent, a five-year grace period and mortgages of up to 40 years — while maintaining the stability of the financial system, the ministry said.
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