The central bank yesterday asked domestic lenders to come up with self-disciplinary measures by Sept. 6 to limit mortgage operations to prevent an overconcentration of real-estate loans.
The monetary policymaker made the request after meetings with 34 local lenders and cooperative banks to gain a better understanding of the housing market, said Alan Pan (潘榮耀), director general of the central bank’s banking department.
The central bank called on all lenders to submit quantitative control measures on their own to cool mortgage operations as “all agreed the housing market is heating up,” Pan told an online news conference yesterday.
Photo: George Tsorng, Taipei Times
As of June 30, real-estate lending accounted for 37.4 percent of the banking system’s loans, close to the record of 37.9 percent, Pan said.
He called for greater diversification and suggested that it would be safer to keep the ratio at 35 percent to 36 percent to avoid credit crunches for other business sectors.
House loans and prices showed signs of moderation between June 2020 and June last year following waves of selective credit controls and unfavorable policy measures, the central bank said.
However, housing fever surged again in the second half of last year following the government’s introduction of favorable lending terms for first-home buyers, including interest subsidies, a five-year grace period and mortgages of 40 years, the central bank said.
An overconcentration of credit in real estate threatens the stability of the financial system and would hinder the growth of other sectors, it said.
All banks should exercise caution and move to prevent money from overflowing to the property market to help to curb speculation and land hoarding, practices that would spur unreasonable price hikes, Pan said.
Banks should apply their own quantitative control measures without affecting loans intended for urban renewal projects, first-home purchases and relocations, he said.
The central bank would launch inspections to make sure lenders follow through with their own control measures, he added.
Further, the central bank would continue to monitor the housing market and introduce more credit controls, if necessary, to maintain the health of the financial system. The bank is due to review its monetary policy on Sept. 19.
In a related development, the Ministry of Finance yesterday said that a second wave of inspections found 73 more cases of fraudulent buyers and misuses of the favorable lending terms.
The inspections led to a crackdown on 39 fraudulent buyers and 34 mortgagers who leased out their apartments, the ministry said.
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