The tax panel of the ruling Liberal Democratic Party basically agreed Wednesday to maintain tax breaks for housing loans for two to three years, albeit on a reduced scale, sources within the party said.

Under the current system, people repaying housing loans can deduct up to 5.87 million yen over 15 years.

The margin of the planned reduction in the income tax deduction for housing loans is expected to be small, given concerns over the possible adverse effects a large reduction would have on the economy, the sources said, adding that the panel will settle the issue this weekend.