Home loans extended by five major local home mortgage lenders fell 5.13 percent last month from May after the new luxury tax came into effect during that month, cooling demand for home mortgages, according to the central bank.
The central bank said on Friday that home mortgages extended by the five commercial banks last month fell NT$2.65 billion (US$91 million) from a month earlier to NT$49.01 billion.
The higher number of home mortgages extended in May reflected many home sellers rushing to complete their transactions before the luxury tax became effective.
The central bank said after the government imposed the luxury tax last month, many speculators in the local property market took to the sidelines to avoid the additional financial burden, resulting in reduced property transactions and the decline in home mortgages last month.
Under the newly imposed tax, property owners who sell their property within one year of purchase are subject to a 15 percent tax and those who sell their property within two years must pay a 10 percent tax. Other luxury items, such as yachts and luxury cars which are valued at more than NT$3 million, will be taxed at 10 percent.
Meanwhile, the average lending rate of mortgages extended last month rose 0.001 percentage points from May to 1.827 percent, marking the highest level in 25 months.
The higher borrowing costs incurred by home buyers were the result of the hike in the central bank’s key interest rates, the central bank said.
On the back of higher home mortgages and consumer loan interest rates, the average lending rate of all loans extended by the five major lenders last month also rose 0.059 percentage points from May to 1.529 percent, the central bank said.
The five major home loan providers were Bank of Taiwan (臺灣銀行), Taiwan Cooperative Bank (合作金庫銀行), Land Bank of Taiwan (土地銀行), Hua Nan Commercial Bank (華南銀行) and First Commercial Bank (第一銀行).
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