Most choose to limit loan debt to 35%

Sinyi Realty’s research director Tseng Ching-der said the 35% mortgage burden limit worked for many, as banks are offering 30-year loans.

  • By Crystal Hsu / Journalist

Most Taiwanese find house price increases acceptable, as long as the mortgage burden does not exceed 35% of their household income, a survey by Sinyi Realty Inc (信義 房屋) said yesterday.

About two-thirds of those polled cap mortgage payments at less than 35% of household income, but would allow more flexibility for homes in Taipei, according to the survey.

About 13% said they could go up to over 50% for houses in the capital, Sinyi research director Tseng Ching-der (曾 進 德) said.

Photo: ANC

The upward trend in house prices has not dampened purchase interest, as most homebuyers still manage to get loans up to the 35% limit, he said.

The 35% limit is viable as banks increasingly offer 30-year mortgage payment programs, compared to 20 years for most, making home purchases more accessible, Tseng added.

Up to 73% of respondents in Taichung said they could tolerate a mortgage burden of 35%, followed by 70% in Tainan, 69% in New Taipei City and Taoyuan, 68% in Hsinchu City and 62% in Taipei .

In Taipei, 38 percent of those polled said they could accept a mortgage burden of more than 40 percent, compared to 27 to 37 percent for homebuyers elsewhere, he said.

The results are not surprising given that house prices are much higher in Taipei, Tseng said, adding that record interest rates and a longer grace period of up to five years for home buyers. ‘a first house supported housing purchases.

However, Tseng cautioned against over-indebtedness, as central bank governor Yang Chin-long (楊金龍) indicated last week that he would move towards normalizing monetary policy next year, with Potential rate hikes of 25 basis points if all sectors emerge from COVID-19. pandemic and inflationary pressures are increasing.

Homebuyers should give serious thought to taking on a higher mortgage burden and see if their lifespans stay the same, given potential rate hikes next year, Tseng added.

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