Image Credit: Taiwan News
Taiwan’s Central Bank has introduced four new restrictions targeting housing speculators in response to concerns about the rising real estate market. During its third-quarter board meeting on 19 September, the bank unveiled the measures aimed at reducing speculation and stabilising the market.
The new rules include the end of grace periods for first-time home loans for individuals who already own properties. It was also noted that the loan-to-value ratio for second-home mortgages will be tightened from 60% to 50% nationwide. For luxury homes and third mortgages, the ratio has been lowered from 40% to 30%, both for corporations and individuals. Additionally, developers using unsold homes as collateral will face a reduced loan-to-value ratio, down to 30% from the previous 40%.
The Central Bank had already asked domestic banks to create a plan for controlling their real estate lending in August. This followed a surge in both prices and transactions after the Ministry of Finance introduced its housing stabilisation plan. Loan levels have since approached regulatory limits, prompting the bank to step in with more forceful credit controls.
The Finance Ministry has advised banks to prioritise loans for first-time buyers and self-use residential loans, as well as those with existing commitments, to address the market’s recent housing loan shortage.
These new measures, which include a 0.1% increase in the reserve requirement ratio, are expected to take effect from 20 September. Although interest rates were left unchanged, the Central Bank’s decision is seen as part of a broader effort to curb real estate speculation and maintain financial stability in the face of rising market pressures.