Taiwan relaxes mortgage rules as interest rate hike looms

Taiwan's Central Bank has announced two major relaxations in credit controls to support the housing market. The loan-to-value ratio for second-home buyers has been increased from 60% to 70%. Additionally, the requirement for developers to commence construction within 18 months of land purchase has been removed, allowing banks to assess cases individually.

Despite these relaxations, the real estate sector faces challenges. A recent survey indicates a contraction in the housing industry chain, impacting approximately 1.4 million jobs due to reduced transaction volumes. Vacancy rates in Taiwan have dropped to 9.44%, with high vacancy levels noted in older properties and specific cities like Tainan and Kaohsiung.

In the financial sector, E.SUN Financial Holding Co. Chairman Huang Nan-chou noted that market liquidity is tightening due to increased corporate investment and stock market activity. Huang suggested that the Central Bank might implement a 0.125% interest rate hike in the fourth quarter to manage the interest rate differential between Taiwan and the US. He emphasized that E.SUN Bank will continue to prioritize mortgage support for first-time and owner-occupier buyers.