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Central bank tightens loans for luxury home purchases

2012/06/21 21:49:36

Taipei, June 21 (CNA) Buyers of luxury houses in Taipei and New Taipei that are priced NT$80 million (US$2.68 million) or above will only be able to borrow up to 60 percent of the asking price from Friday, the Central Bank of the Republic of China (Taiwan) said Thursday.

Residential real estate valued at NT$50 million or more outside the two cities will be approved for a line of credit up to 60 percent as well, according to a statement released by the central bank.

The measures, which aim to tighten loan agreements for the purchase of luxury homes, stipulate lenders do not give additional credit or grace periods for home buyers, the statement said.

The central bank has asked all banks to adopt the new measures as part of the government's efforts to curb the overheated property market, Perng Fai-nan, the central bank's governor, said at a quarterly policymaking meeting.

The government's move, aimed at raising turnover costs for speculators, was considered "relatively moderate" compared with China and Hong Kong, said Chang Chin-oh, a land economics professor at National Chengchi University.

The new measures will definitely deter buyers, said Billy Yen, general manager of international property consultancy DTZ.

Meanwhile, the cancellation of grace periods may severely hit the market, as borrowers will face capital pressure, Yen noted.

(By Kao Chao-fen and Hanna Liu)