People seeking to move house who apply for mortgages for a second home would not be subject to a 70 percent loan-to-value (LTV) ratio cap as long as they secure agreements with lenders to sell their first homes within a year, the central bank said on Monday.
The central bank proposed the exclusion clause after the cap on second-home mortgages in popular areas drew criticism from housing experts and property developers, who said it would harm people who need to relocate.
The central bank last month announced new credit controls on second-home loans to rein in soaring real-estate prices by lowering the maximum LTV ratio for second-home mortgages from 75 percent to 70 percent in Taipei, New Taipei City, Taoyuan, Taichung, Tainan and Kaohsiung, as well as Hsinchu city and county, effective from June 16.
Photo: CNA
The central bank last week said it would discuss the criticisms with lenders and see how to prevent the latest credit control from harming buyers with real demand.
The exclusionary clause states that people wanting to buy second homes in the popular areas would be able to apply for mortgages with an LTV ratio greater than 70 percent if they pledge in a signed document to sell their first home within a year.
Within that year, borrowers must also complete the registration of the property right transfer, repay any debt, write off their first home mortgage and not take out a second mortgage, the central bank said in a statement.
The arrangement is intended to help people who need to relocate or move to smaller or larger homes due to a change in their family situation or occupation, it said.
People who fail to honor the pledge to sell the first home must return the mortgage differences and would be subject to back interest payments, it said.
Sinyi Realty Inc (信義房屋) said the exclusionary clause reaffirmed the central bank’s stance that its credit controls are directed at speculative property investors and would not affect people with real demand.
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