The Executive Yuan today approved a preferential housing loan program for young homebuyers that would exclude them from restrictions on loan percentages.
According to Article 72-2 of the Banking Act (銀行法), the total amount of loans offered by commercial banks for real-estate loans cannot exceed 30 percent of the aggregate of the bank’s deposits and financial debentures.
Photo: Hsu Yi-ping, Taipei Times
Young homebuyers applying for mortgages would now not be subject to the 30-percent cap under the new plan, giving banks more lending capacity to address the recent decline in mortgages and help young people get on the property ladder, the Cabinet said.
The new guidelines would be retroactive to Monday, it added.
The government would continue to regulate credit to ensure that funds are allocated appropriately and where they are most needed, the Executive Yuan said.
Safeguards have been put in place. Firstly, each person could only use this program once, secondly, applicants must sign a pledge that they would personally occupy the property, with the government to implement cross-ministerial checks, and thirdly, penalties would be put in place for violations such as subletting, using dummy accounts and house flipping, it added.
Penalties would include loan term adjustments and removal of interest subsidies, it added.
The new guidelines would still require young homebuyers to meet certain requirements, including the “5Ps:” purpose, payment, protection, perspective and people, while banks would continue to ensure that mortgage applicants have the means to pay it back, it said.
Not every applicant would be eligible for the maximum NT$10 million (US$325,918) loan or a 40-year mortgage, it added.
The new policy is among the three “youth-first” items approved by the Cabinet today.
The two other items are the Stable Housing Plan, which includes more social housing for married and child-rearing units, and flexible parental leave policies.
The Stable Housing Plan, which is to be in effect starting this year until 2028, would ensure that 20 percent of social housing is allocated to families with children aged under 6, with residency extended to 12 years, it said.
Approximately 1,000 units would be released this year with a target of a total of 11,000 by 2028, it added.
Moreover, eligibility would be expanded for rent subsidies, set to rise to 3.5 times the minimum living cost plus an additional 150 percent for newlyweds and 50 percent per child, it said.
As for parental leave policies, parents would now be able to apply for leave by the day with up to 30 days available per parent to cover temporary childcare needs, a Cabinet official said.
The policy aims to boost the participation of fathers in child-rearing and offers them the same leave options as mothers, they said.
A further “family care leave” may also be taken by the hour to address urgent needs, eligible for parents and those caring for elderly family members, it said.
The government would support employers in providing parental leave by providing NT$1,000 daily subsidies for each employee for small firms with fewer than 30 employees, it added.
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