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Regulator closely monitoring realty loans by banks.

Taipei, April 22, 2010 (CENS) -- To curb unbridled housing prices, the Central Bank of China (CBC) and the Financial Supervisory Commission (FSC) are carrying out inspection of housing-loan extension by financial institutions.

In the joint operation, the CBC is focusing on the percentage of housing loans and risk management, while the FSC on credit-extension policy, credit-extension management, consumer protection, and legal abidance.

The operation echoed the displeasure expressed by Perng Fai-nan, CBC governor, concerning rampant speculation by realty developers at the Legislative Yuan yesterday (April 21). Perng pointed out that some developers claim bloated prices for their projects, way higher than actual transaction prices. He specifically pointed to the project near the residence of former President Chiang Kai-shek in Shilin district of Taipei City, for which Shining Group, the developer, claims NT$3 million per ping (one ping equals 36 square feet), although no one deal has yet to be settled so far.

Meanwhile, in response to the requirement of the CBC and FSC, domestic banks have decided to tighten some realty loans, including lowering the ceiling of vacant-land loans to 50% of their market prices, down from 75% originally, and retrieve vacant-land loans, should the developers fail to break ground on the development projects in one year. The latter is for the prevention of land hoarding. Banks are also delivering realty loans in installments, along with the progress of development projects, instead of in one fell swoop at the beginning.

((Philip Liu))

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Publication:The Taiwan Economic News
Article Type:Brief article
Geographic Code:9TAIW
Date:Apr 22, 2010
Words:243
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