The central bank intends to maintain selective credit controls on local banks for an extended period and might fine-tune its control measures, central bank Governor Yang Chin-long (楊金龍) said on Saturday.
The central bank’s main concerns stem from housing price increases across Taiwan and the annual growth in lenders’ outstanding housing loans remaining high, Yang said.
The governor made the remarks during a speech at a forum in Taipei that focused on the role of the central bank in ensuring a sound development of the housing market.
Photo courtesy of the central bank
“The central bank will continue to review and adjust selective credit control measures on a rolling basis to promote financial stability,” the central bank’s Web site quoted Yang as saying.
The central bank has introduced four rounds of selective credit controls on local banks since December 2020 to curb rising property prices and land hoarding.
The measures have increased in scope and include stricter loan-to-value limits on property purchases and restrictions on presale housing transactions, which were necessary because mortgages made up most bank lending and speculative transactions had been reported in several cities, the central bank said.
Other central bankers had suggested adjusting interest rates to rein in rising home prices and curb speculation.
In an article in the January edition of Taiwan Banker magazine, central bank Deputy Governor Chen Nan-kuang (陳南光) wrote that low interest rates are to blame for rising housing prices and should be included in the considerations over monetary policy tools to address the issue.
Reiterating his stance, Yang said that the central bank would raise its policy rates at an appropriate time, which would prevent home prices from rising further, and make the selective credit controls more effective and help promote financial stability.
However, Yang said that the central bank mainly uses interest rates to stabilize the overall economy, adding that the rates are only one of several factors that affect housing prices.
Interest rate adjustments have a wide range of effects on the economy, Yang said, adding that it requires a significant rate increase to meaningfully affect housing prices.
“If the issue of housing prices is simply dealt with through interest rates, the trade-off would be a substantial slowdown in economic growth, and the costs would far outweigh the benefits,” Yang said. “Nonetheless, a slight increase in policy rates would not only fail to achieve a significant downward revision in housing prices, but might also lead to additional unemployment.”
“Raising interest rates doesn’t actually help young people struggling to buy a home. The main winners are the elderly and the wealthy,” he added.
The development of the housing market covers a wide range of issues, such as financial stability, housing justice and resource allocation, and there are structural problems embedded in the domestic housing market, the governor said, adding that the matter is complex, and demands central and local government agencies to work together to come up with short, medium and long-term measures to cope with the matter.
Yang said that the rise in housing prices in Taiwan over the past two years was due to demand-side factors — such as abundant global liquidity, strong private investment, consumers’ anticipation and speculation in the market — and supply-side factors — including rising land prices, and costs of building materials and wages.
The housing market has in the past few years been especially hot in the central and southern parts of Taiwan, he said.
The current credit controls are wider in scope, more diverse and stronger than previous measures, he said.
However, to effectively lower unrealistic expectations, curb speculation and prevent land hoarding, other financial and tax measures would also be needed, while expanding the amount of social housing and providing affordable rental homes remain crucial, Yang said.
Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) yesterday said that its investment plan in Arizona is going according to schedule, following a local media report claiming that the company is planning to break ground on its third wafer fab in the US in June. In a statement, TSMC said it does not comment on market speculation, but that its investments in Arizona are proceeding well. TSMC is investing more than US$65 billion in Arizona to build three advanced wafer fabs. The first one has started production using the 4-nanometer (nm) process, while the second one would start mass production using the
A TAIWAN DEAL: TSMC is in early talks to fully operate Intel’s US semiconductor factories in a deal first raised by Trump officials, but Intel’s interest is uncertain Broadcom Inc has had informal talks with its advisers about making a bid for Intel Corp’s chip-design and marketing business, the Wall Street Journal reported, citing people familiar with the matter. Nothing has been submitted to Intel and Broadcom could decide not to pursue a deal, according to the Journal. Bloomberg News earlier reported that Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) is in early talks for a controlling stake in Intel’s factories at the request of officials at US President Donald Trump’s administration, as the president looks to boost US manufacturing and maintain the country’s leadership in critical technologies. Trump officials raised the
‘SILVER LINING’: Although the news caused TSMC to fall on the local market, an analyst said that as tariffs are not set to go into effect until April, there is still time for negotiations US President Donald Trump on Tuesday said that he would likely impose tariffs on semiconductor, automobile and pharmaceutical imports of about 25 percent, with an announcement coming as soon as April 2 in a move that would represent a dramatic widening of the US leader’s trade war. “I probably will tell you that on April 2, but it’ll be in the neighborhood of 25 percent,” Trump told reporters at his Mar-a-Lago club when asked about his plan for auto tariffs. Asked about similar levies on pharmaceutical drugs and semiconductors, the president said that “it’ll be 25 percent and higher, and it’ll
CHIP BOOM: Revenue for the semiconductor industry is set to reach US$1 trillion by 2032, opening up opportunities for the chip pacakging and testing company, it said ASE Technology Holding Co (日月光投控), the world’s largest provider of outsourced semiconductor assembly and test (OSAT) services, yesterday launched a new advanced manufacturing facility in Penang, Malaysia, aiming to meet growing demand for emerging technologies such as generative artificial intelligence (AI) applications. The US$300 million facility is a critical step in expanding ASE’s global footprint, offering an alternative for customers from the US, Europe, Japan, South Korea and China to assemble and test chips outside of Taiwan amid efforts to diversify supply chains. The plant, the company’s fifth in Malaysia, is part of a strategic expansion plan that would more than triple
RSS