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ToggleThe New Youth Safety Policy 1.0, which began in August 2023, will expire at the end of July this year, and the Ministry of Finance is reviewing the policy. This issue was discussed at a routine meeting earlier this week between the Ministry of Finance and the board of directors of state-owned financial holding companies.
There is a consensus on continuing the new Qing'an 2.0, but the direction of adjustment is still undecided.
There is currently a consensus in the market that New Youth Safety 2.0 will continue the 1.0 rollout. However, Premier Cho Jung-tai has clearly stated that New Youth Safety 2.0 " will not be extended in the same way " and will undergo substantial adjustments. At a meeting on the 11th, the Ministry of Finance only stated that New Youth Safety is currently under review and reminded state-owned banks to pay attention to the speed of fund disbursement to avoid keeping the public waiting too long.
The current new Qing'an plan has four core elements:
- Interest subsidies: Publicly owned banks subsidize half the rate (0.125%), and the Ministry of the Interior's Housing Fund subsidizes 1.5 times the rate (0.375%), with a single-rate interest rate as low as 1.775%.
- Grace period: extended from 3 years to 5 years
- Loan term: Up to 40 years
- Loan amount: Up to 10 million yuan
State-owned banks have put forward three suggestions, targeting interest rate subsidies and grace periods.
State-owned banks have recently put forward three suggestions as a reference for the reform of New Qing'an 2.0:
First, the interest subsidy needs to be reviewed : Currently, it is jointly subsidized by state-owned banks and housing funds. However, state-owned banks have suggested that, considering the cost of funds and market fairness, the interest subsidy may be gradually phased out or reduced in the future to avoid causing a sharp jump in interest rates for existing borrowers.
Second, shorten the grace period : banks suggest shortening it to 3 years to prevent some borrowers from deliberately extending the repayment buffer.
Third, an age limit ("80 clause") is set : the borrower's age plus the loan term shall not exceed 80 years to ensure that the loan period is reasonable.
Monthly subsidies amount to billions, and state-owned banks bear a heavy burden but are willing to continue shouldering the responsibility.
State-owned banks subsidize half the interest on loans from Hsin Ching An loans using their own funds. The subsidy amount varies depending on the number of loan approvals in a given month. For example, a medium-to-large state-owned bank would subsidize approximately several billion New Taiwan Dollars per month, representing a significant financial burden.
Currently, state-owned banks have indicated they are prepared to continue providing subsidies, but they likely still hope to lower the subsidy ratio. They also emphasized that if income ineligibility criteria were included, resources could be allocated more rationally.
The main purpose of the new Qing'an is for the government to assist first-time homebuyers and young people in buying homes, while high-income earners are able to afford their own mortgage interest. Setting up income-exclusion clauses can allow resources to be allocated more rationally.
Regarding the income threshold for exclusion, banks have suggested excluding "those with annual income exceeding a certain level." Specific figures are still under discussion, but the direction has been approved by the Ministry of Finance as a basis for further discussion.
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Analysis of Interest Subsidy Policy: How State-Owned Banks Can Play the Role of Policy Implementers
