Preferential mortgage program for young people extended

  • Date: 2017-01-16

I. Background

To ease the burden of current housing costs, the government has implemented a comprehensive housing policy that aims to foster a healthy real estate market, provide a wide range of housing assistance measures, and improve the quality of the living environment. Depending on individual needs and financial abilities, assistance is available to help people purchase, rent or renovate houses so that everyone can have a suitable place to call home.

As part of this comprehensive policy, the government in December of 2010 launched a preferential mortgage program where eight state-owned or partially state-owned banks, including the Bank of Taiwan, use their own capital to provide favorable mortgages to young non-homeowners. The program, already extended twice, was scheduled to conclude in 2016 but has been extended again to the end of 2018 to meet the growing needs of young homebuyers.


II. Serve young homebuyers, ease housing burden, achieve housing justice

A. The preferential mortgage program, launched in 2010 to encourage young people to buy homes for their own use, is open to applicants aged 20 or over, provided that the applicant, and their spouse or underage children do not own residential property. The mortgage amount may not exceed 80 percent of the value of the property, and may be repaid over a period of up to 30 years.

B. On January 1, 2016, the program’s maximum mortgage amount was raised from NT$5 million to NT$8 million (US$148,632 to US$237,812). First-year interest rates currently range from 1.44 percent (floating) to 1.62 percent (mix of fixed and floating), which are more competitive than the average 1.678 percent offered by the five major banks on new mortgages in November of 2016. These lower interest rates have indeed eased the financial burden on buyers. From its inception in December of 2010 to the end of 2016, the program approved a total of NT$856.1 billion (US$26.74 billion) in mortgages for 222,201 homebuyers.


III. Mortgage and interest subsidy programs combine to provide higher mortgage limits

Eligible families who need a higher mortgage amount than the program provides may apply for additional loans under another Ministry of the Interior (MOI) program that subsidizes a portion of the interest payments. By combining the two programs, the buyer may borrow up to NT$10.5 million (US$328,022), subject to the maximum approved by the bank.

The MOI interest subsidies are available to people who have the ability to purchase but do not own a home, or those have purchased only one home through a mortgage loan within the past two years. Homebuyers in Taipei City, New Taipei City, and other special municipalities or counties may respectively borrow up to NT$2.5 million, NT$2.3 million and NT$2.1 million (US$78,100, US$71,852 and US$65,604), and take up to 20 years to repay the mortgage.


IV. Conclusion

The government has the responsibility to help every family—especially the economically disadvantaged—find a quality home they can afford, and the preferential mortgage program for young people is only one of many forms of assistance under the overall housing policy. Other measures such as rental subsidies or interest subsidies for home purchases or renovations have reduced people’s financial burdens and helped them find suitable houses. The government is also working on providing 200,000 rental-only “social housing” units within eight years so that young people, middle-class workers, single parent families, people suffering from disabilities, senior citizens, and all those unable to afford their own homes can find a safe and dignified environment in which to live. All of these efforts are intended to achieve the administration’s objectives of housing justice and social justice.