The central bank yesterday kept its policy rates unchanged, but hiked banks’ required reserve ratio by 25 basis points and tightened second-home mortgage terms, in a measured effort to cool the property market.
“The loan-to-value cap for second-home purchases will be restricted from 70 percent to 60 percent” in the six special municipalities — Taipei, New Taipei City, Taoyuan, Taichung, Tainan and Kaohsiung — plus Hsinchu city and county, effective today, central bank Governor Yang Chin-long (楊金龍) told a news briefing after a quarterly policy meeting.
The latest reserve requirement ratio move would take approximately NT$120 billion (US$3.71 billion) out of the market, starting next month, to help prevent an overconcentration of real-estate loans and ensure financial market stability, Yang said.
Photo: CNA
The bank’s rediscount rate remained at 2 percent, while the secured lending and unsecured lending rates stood at 2.375 percent and 4.25 percent respectively.
The renewed selective credit controls and reserve requirements followed house loans and home prices advancing rapidly after the government in August last year introduced interest subsidies and other favorable lending terms for first-home purchases.
The Ministry of Finance, which is responsible for the stimulus program with help from state-run banks, is to conduct a review and close loopholes of the program to prevent its abuse, the governor said.
While the central bank pays close attention to house prices, it would not necessarily take action to curb house price hikes, if they stem from improving economic fundamentals, Yang said.
Taiwan has gained importance on the world stage for supplying electronics used in smartphones and artificial intelligence applications, a megatrend that is prompting local firms to build new plants and pushing up house prices near the plants, the governor said.
Yang said he is not particularly worried about house price increases that have the backing of economic fundamentals.
What matters for the central bank is whether house price hikes would threaten the nation’s financial market stability and whether there is an overconcentration of real-estate loans, he added.
Stress tests show local lenders could withstand shocks when interest rates climb to 3 percent and house prices plunge 40 percent, Yang said.
The central bank left interest rates intact, because inflationary pressure has been subdued and a negative output gap lingers, he said.
The central bank raised its forecast for GDP growth this year to 3.77 percent, up from the 3.22 percent it predicted in March.
The central bank is expecting a milder 2.12 percent increase in the consumer price index (CPI) for this year, down from 2.16 percent previously.
Core CPI would ease to 2 percent, lower than the headline CPI, in a rare phenomenon, the governor said.
A long-term cautious financial planning for prospective first-home buyers is necessary, Yang said.
The interest subsidies would last only three years and grace periods five years, he added.
Semiconductor shares in China surged yesterday after Reuters reported the US had ordered chipmaking giant Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) to halt shipments of advanced chips to Chinese customers, which investors believe could accelerate Beijing’s self-reliance efforts. TSMC yesterday started to suspend shipments of certain sophisticated chips to some Chinese clients after receiving a letter from the US Department of Commerce imposing export restrictions on those products, Reuters reported on Sunday, citing an unnamed source. The US imposed export restrictions on TSMC’s 7-nanometer or more advanced designs, Reuters reported. Investors figured that would encourage authorities to support China’s industry and bought shares
TECH WAR CONTINUES: The suspension of TSMC AI chips and GPUs would be a heavy blow to China’s chip designers and would affect its competitive edge Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), the world’s biggest contract chipmaker, is reportedly to halt supply of artificial intelligence (AI) chips and graphics processing units (GPUs) made on 7-nanometer or more advanced process technologies from next week in order to comply with US Department of Commerce rules. TSMC has sent e-mails to its Chinese AI customers, informing them about the suspension starting on Monday, Chinese online news outlet Ijiwei.com (愛集微) reported yesterday. The US Department of Commerce has not formally unveiled further semiconductor measures against China yet. “TSMC does not comment on market rumors. TSMC is a law-abiding company and we are
FLEXIBLE: Taiwan can develop its own ground station equipment, and has highly competitive manufacturers and suppliers with diversified production, the MOEA said The Ministry of Economic Affairs (MOEA) yesterday disputed reports that suppliers to US-based Space Exploration Technologies Corp (SpaceX) had been asked to move production out of Taiwan. Reuters had reported on Tuesday last week that Elon Musk-owned SpaceX had asked their manufacturers to produce outside of Taiwan given geopolitical risks and that at least one Taiwanese supplier had been pushed to relocate production to Vietnam. SpaceX’s requests place a renewed focus on the contentious relationship Musk has had with Taiwan, especially after he said last year that Taiwan is an “integral part” of China, sparking sharp criticism from Taiwanese authorities. The ministry said
US President Joe Biden’s administration is racing to complete CHIPS and Science Act agreements with companies such as Intel Corp and Samsung Electronics Co, aiming to shore up one of its signature initiatives before US president-elect Donald Trump enters the White House. The US Department of Commerce has allocated more than 90 percent of the US$39 billion in grants under the act, a landmark law enacted in 2022 designed to rebuild the domestic chip industry. However, the agency has only announced one binding agreement so far. The next two months would prove critical for more than 20 companies still in the process
RSS