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Talk of the day -- Central bank moves to curb mortgage lending

2012/04/24 21:02:07

Central bank Governor Perng Fai-nan met with the heads of Taiwan's nine domestic banks Monday, asking them to tighten limits on mortgage lending amid ever-rising housing prices in Taipei.

The meeting marked the second time since October 2009 that the central bank has acted to cool the property market, which recently saw property in Taipei being sold for NT$3.04 million (US$103,116) per ping (3.3 square meters), the highest price ever recorded, according to local media reports.

The heads of Bank of Taiwan, Land Bank of Taiwan, Taiwan Cooperative Bank, First Commercial Bank, Hua Nan Commercial Bank, Chang Hwa Bank, Mega International Bank, Taipei Fubon Bank and Cathay United Bank particpated in the meeting that focused on risk management in real-estate financing.

The nine banks currently hold a combined total of NT$3.5 trillion in real-estate loans, representing more than 60 percent of the outstanding loans in the housing market.

The following are excerpts from local media coverage of the central bank's move to curb housing prices:

United Daily News:

Housing transactions for the first quarter of this year in both Taipei and New Taipei dropped by 50 percent from the same period of last year, an indication that activity in the housing market has declined, Huang A-wang, director-general of the banking examination department at the central bank, said at the press conference Monday.

However, housing prices continued to rise in the country, which is abnormal market behavior, Huang said.

Perng urged bankers to maintain the soundness of the banking system by enhancing risk management on home and land loans.

Susan Chang, chairwoman of state-owned Taiwan Financial Holdings Co., told reporters that the record NT$3.04 million per ping transaction price reported in the media was not the actual transaction price, indicating that housing prices were being hiked up by realtors seeking to profit from false information.

China Times:

Perng said should realtors continue their speculative moves, the central bank will initiate a case-by-case assessment to check whether housing prices were indeed as marketed.

The central bank stated that the amount of industrial real estate and land financing cannot exceed 65 percent of the total acquisition cost.

Taiwan Cooperative Bank reached a decision following the meeting with Perng that industrial land loans cannot exceed 60 percent of the total acquisition cost, while industrial real-estate loans cannot exceed 50 percent of the total cost, all stricter than the central bank's requirement. (April 24, 2012).

(By Ann Chen)