The central bank yesterday tightened credit controls for real-estate financing after verbal warnings failed to rein in property price hikes linked to capital repatriation and loose lending.
It is the first time in a decade that the monetary policymaker has implemented credit controls directed at multiple homebuyers, land financing and lending for unsold houses.
Starting today, the loan-to-value (LTV) ratio would be capped at 60 percent for corporate buyers for their first property and drop to 50 percent for their second, the bank said.
Photo: Liao Chen-huei, Taipei Times
No grace period is allowed.
“The measures are targeted at corporate and individual property investors and will not affect first-time homebuyers or people with real demand or relocation needs,” central bank Governor Yang Chin-long (楊金龍) told an unscheduled news conference ahead of the quarterly board meeting on Thursday.
Housing prices have increased noticeably, especially in central and southern Taiwan, although the pace is not as drastic as in 2010, he said.
It is better to act now, if credit controls are necessary to reverse the trend, he added.
For individual buyers, the LTV ratio is set at 60 percent for their third home and no grace period is allowed, Yang said.
The LTV ratio for luxury homes remains unchanged at 60 percent, he added.
Clear and consistent LTV ratios might help banks carry out real-estate financing, as they currently have different standards, making it difficult to regulate, he said.
Some banks offer ultra-low interest rates, while others grant unreasonably long grace periods, it said.
As a result, real-estate lending reached 35.9 percent of banks’ total outstanding loans as of October, close to the historical peak of 37.9 percent, Yang said.
Global low-interest rates have driven some liquidity to the property market, while capital has also lent support, he said.
That explains why housing prices in the proximity of science parks in Hsinchu, Taichung and Tainan have risen, as have housing prices in rezoning areas nationwide, the central bank governor said.
Banks will have to limit land financing to 65 percent of their value and set aside 10 percent loans until after developers produce concrete development plans, Yang said, adding that the restriction is intended to prevent land hoarding.
Banks also have to cap loans for unsold homes at 50 percent of their value to avoid house-hoarding on the part of builders, he said, adding that some companies have overly high inventories.
The central bank would further tighten credit controls if the situation fails to improve, Yang said.
Taiwan has arranged for about 8 million barrels of crude oil, or about one-third of its monthly needs, to be shipped from the Red Sea this month to bypass the Strait of Hormuz and ease domestic supply pressures, CPC Corp, Taiwan (CPC, 台灣中油) said yesterday. The state-run oil company has worked with Middle Eastern suppliers to secure routes other than the Strait of Hormuz, through which about 20 percent of the world’s oil and liquefied natural gas typically passes, CPC chairman Fang Jeng-zen (方振仁) said at a meeting of the legislature’s Economics Committee in Taipei. Suppliers in Saudi Arabia have indicated they
A global survey showed that 60 percent of Taiwanese had attained higher education, second only to Canada, the Ministry of the Interior said. Taiwan easily surpassed the global average of 43 percent and ranked ahead of major economies, including Japan, South Korea and the US, data from the Organisation for Economic Co-operation and Development (OECD) for 2024 showed. Taiwan has a high literacy rate, data released by the ministry showed. As of the end of last year, Taiwan had 20.617 million people aged 15 or older, accounting for 88.5 percent of the total population, with a literacy rate of 99.4 percent, the data
CCP ‘PAWN’? Beijing could use the KMT chairwoman’s visit to signal to the world that many people in Taiwan support the ‘one China’ principle, an academic said Chinese Nationalist Party (KMT) Chairwoman Cheng Li-wun (鄭麗文) yesterday arrived in China for a “peace” mission and potential meeting with Chinese President Xi Jinping (習近平), while a Taiwanese minister detailed the number of Chinese warships currently deployed around the nation. Cheng is visiting at a time of increased Chinese military pressure on Taiwan, as the opposition-dominated Legislative Yuan stalls a government plan for US$40 billion in extra defense spending. Speaking to reporters before going to the airport, Cheng said she was going on a “historic journey for peace,” but added that some people felt uneasy about her trip. “If you truly love Taiwan,
NEW LOW: The council in 2024 based predictions on a pessimistic estimate for the nation’s total fertility rate of 0.84, but last year that rate was 0.69, 17 percent lower An expected National Development Council (NDC) report expects the nation’s population to drop below 12 million by 2065, with the old-age dependency ratio to top 100 percent sooner than 2070, sources said yesterday. The council is slated to release its latest population projections in August, using an ultra-low fertility model, the sources said. The previous report projected that Taiwan’s population would fall to 14.37 million by 2070, but based on a new estimate of the total fertility rate (TFR) — the average number of children born to a woman over her lifetime — the population is expected to reach 12 million by
RSS