The central bank plans to use inspections of lenders’ mortgage operations to replace credit controls in the cooling domestic housing market, as current tightening measures have proven effective, Governor Yang Chin-long (楊金龍) said at a meeting of the legislature’s Finance Committee in Taipei yesterday.
When asked by lawmakers if the central bank would replace fresh credit controls with financial inspections in moderating real estate lending, Yang answered “of course.”
His remarks came as the central bank is to hold its quarterly board meeting on Thursday next week, with the market closely watching its interest rate decisions and potential new housing credit controls.
Photo: CNA
As US President Donald Trump’s tariff hikes cast unfavorable shadow over the landscape ahead, Yang said the central bank’s board directors would have the final say on interest rate decisions and credit control measures after factoring in inflation and inflation expectations, major global central banks’ monetary policy and economic and financial conditions at home and abroad.
The central bank conducted 170 special inspections between 2021 and last year, and would press ahead with the practice to make sure lenders stand by their planned schedule in slowing real estate lending, which approached a record high in the summer last year, Yang said.
The central bank tightened its credit controls on local lenders in September last year as the property market heated up. Since then, most banks have met their self-imposed targets regarding housing loan restrictions, Yang said.
However, a few fell short and would be required to provide explanations and improvement measures, Yang said, adding that the central bank would supply legislators with data on the laggards.
Home loan restrictions effectively help calm house price increase expectations, prioritize homebuyers with real demand and reduce banks’ exposure to real estate loans, the governor said.
As a result, the concentration of real estate loans in banks’ portfolios has gradually declined, Yang said.
However, the central bank would review its credit controls dynamically as the market evolves, he said.
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