The Cabinet yesterday gave the go-ahead to measures to restrict favorable lending terms for first-home purchases to once per person and require borrowers to sign an affidavit stating the house is intended for self-occupancy.
The tightened requirements came amid rising concerns over dummy buyers and misuse of loans, as mortgage operations have soared to new highs and home prices have increased by double-digit percentage points across Taiwan.
“The restrictions will go into practice immediately,” Deputy Minister of Finance Frank Juan (阮清華) told a media briefing in Taipei, adding that state-run lenders would closely review loan applicants to root out dummy buyers and property investment.
Photo: CNA
Surveys have showed that favorable lending terms introduced in August last year have revived a property boom, as they allow first-home buyers an interest rate of 1.775 percent, a five-year grace period and mortgages of up to 40 years.
Investors and wealthy people have allegedly used dummy buyers, including their children, to take advantage of the program designed to help people with real demand to buy a home, Juan said.
State-run lenders would tighten reviews of loan applications from the same household and ask borrowers to pledge that they would not lease the house, which would be against the self-occupancy requirement, he said.
People found to have contravened the rules would have their interest subsidy revoked and must return the difference, he said.
Furthermore, favorable lending terms are limited to once per person, meaning that those who sell a home purchased under the program would not qualify to apply again, Juan said.
As of May 31, the program had aided 57,980 house purchases, with combined mortgages totaling NT$428.1 billion (US$13.16 billion), the ministry said.
Houses valued at under NT$15 million accounted for 78.2 percent of the deals, while 72.99 percent of the people who took out the mortgages were 40 or younger, implying that the program effectively benefitted target buyers and should not be held responsible for rising house prices, Juan said.
Mortgages of 31 to 40 years constituted 50.01 percent of homes bought under the program, while floor areas of 16 ping to 45 ping (48.9m2 to 148.8m2) accounted for 67.76 percent of the homes, he said.
The interest subsidy had cost the state coffers NT$1.78 billion and the government would set aside more money to sustain the program until it expires in 2026, Juan said.
State-run lenders have identified suspect cases and would crack down on abuse of the program, he added.
Real-estate brokers said that the three-year interest subsidy and five-year grace period provide sufficient room for profit-taking for people who cannot afford mortgages.
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