The latest loan restrictions are aimed at slowing house prices and transactions, and more time is needed to see if the credit controls can achieve their intended effect, central bank Governor Yang Chin-long (楊金龍) told the legislature’s Finance Committee yesterday.
Yang explained his policy decisions while taking questions from lawmakers on the latest wave of credit controls the central bank introduced on Sept. 18.
“The housing market was overheating and mortgages growing rapidly,” Yang said, adding that real-estate lending constituted 37.5 percent of overall loans, very close to the historic high of 37.9 percent in October 2009.
Photo: George Tsorng, Taipei Times
The concentration of bank lending for properties is more serious than in 2009, he said.
A day earlier, state-run Mega International Commercial Bank (兆豐銀行), First Commercial Bank (第一銀行), Hua Nan Commercial Bank (華南銀行), Chang Hwa Commercial Bank (彰化銀行) and Taiwan Cooperative Bank (合庫銀行) told lawmakers that their real-estate loans were approaching the 30 percent limit.
All are seeking to avoid breaking the requirement by slowing reviews of mortgage applications.
“It is better for the central bank to take action and cool the market rather than wait and see a housing bubble take shape,” Yang said.
The governor said it is difficult to define a bubble, but purchases of houses on expectations of price hikes would definitely facilitate the creation of a bubble.
Taiwan should learn a lesson from the housing bubbles in Japan, the US and China, which wreaked havoc on their economies, he said, adding that China is still suffering from a slow response in the beginning and an overreaction later on.
The central bank is seeking to find middle ground by lowering the loan-to-value ratio by 10 percent for all mortgages and by denying first mortgagers grace periods if they own more than one house, Yang said.
A sizeable number of Taiwanese own two houses without the need of a mortgage, he said.
A five-year grace period where mortgagers only need to pay interest could encourage short-term property speculation, the central bank said.
The government’s favorable lending terms for first homes for self-occupancy are widely blamed for the resurgence of property fever, as they come with ultra-low interest rates of 1.775 percent, a five-year grace period and mortgage terms of up to 40 years.
The Ministry of Finance, the architect of the favorable lending terms, said that only 25 percent of buyers take advantage of the five-year period.
The central bank last week conceded and extended favorable terms to people who need to move house and those who own a second home through inheritance.
The first group has to sell their second home within a year after relocation to stay qualified, it added.
The down payment is 50 percent of assessed property value for second-home mortgages, compared with 20 percent for first-home mortgages.
Taiwan’s rapidly aging population is fueling a sharp increase in homes occupied solely by elderly people, a trend that is reshaping the nation’s housing market and social fabric, real-estate brokers said yesterday. About 850,000 residences were occupied by elderly people in the first quarter, including 655,000 that housed only one resident, the Ministry of the Interior said. The figures have nearly doubled from a decade earlier, Great Home Realty Co (大家房屋) said, as people aged 65 and older now make up 20.8 percent of the population. “The so-called silver tsunami represents more than just a demographic shift — it could fundamentally redefine the
Businesses across the global semiconductor supply chain are bracing themselves for disruptions from an escalating trade war, after China imposed curbs on rare earth mineral exports and the US responded with additional tariffs and restrictions on software sales to the Asian nation. China’s restrictions, the most targeted move yet to limit supplies of rare earth materials, represent the first major attempt by Beijing to exercise long-arm jurisdiction over foreign companies to target the semiconductor industry, threatening to stall the chips powering the artificial intelligence (AI) boom. They prompted US President Donald Trump on Friday to announce that he would impose an additional
China Airlines Ltd (CAL, 中華航空) said it expects peak season effects in the fourth quarter to continue to boost demand for passenger flights and cargo services, after reporting its second-highest-ever September sales on Monday. The carrier said it posted NT$15.88 billion (US$517 million) in consolidated sales last month, trailing only September last year’s NT$16.01 billion. Last month, CAL generated NT$8.77 billion from its passenger flights and NT$5.37 billion from cargo services, it said. In the first nine months of this year, the carrier posted NT$154.93 billion in cumulative sales, up 2.62 percent from a year earlier, marking the second-highest level for the January-September
Asian e-commerce giant Shein’s (希音) decision to set up shop in a historic Parisian department store has ruffled feathers in the fashion capital. Anger has been boiling since Shein announced last week that it would open its first permanent physical store next month at BHV Marais, an iconic building that has stood across from Paris City Hall since 1856. The move prompted some French brands to announce they would leave BHV Marais, but the department store had already been losing tenants over late payments. Aime cosmetics line cofounder Mathilde Lacombe, whose brand was among those that decided to leave following
RSS