Domestic banks have made progress in risk management related to real-estate financing, as is evidenced by the decline in construction and home loans last year, the Financial Supervisory Commission (FSC) said on Saturday.
The financial regulator made the statement after mortgage lending levels climbed to a new high in December last year, fueling concerns of an over-concentration of mortgage loans and a revived fervor for property purchases.
The FSC, which put 17 local lenders on its watch list, said banks had made concrete improvements in their risk management, as home loans and funds for home renovations dropped by almost 10 percent to N$$3.68 trillion (US$124.92 billion) last year, compared with the level a year earlier.
“The figures lent support to risk-control enhancement as a result of strengthened inspections,” the FSC said in a statement.
The banks at issue included Far Eastern International Bank (遠東銀行), Union Bank of Taiwan (聯邦銀行), Cosmos Bank Taiwan (萬泰銀行), Ta Chong Bank (大眾銀行) and Entie Commercial Bank (安泰銀行), as well as state-run Land Bank of Taiwan (土銀) and Taiwan Cooperative Bank (合庫).
In a report to the legislature early last year, the commission said it would tighten inspections of banks’ mortgage operations, in line with banking rules that cap home loans at 30 percent of total savings deposits and financial assets.
In particular, the commission said it would pay close attention to mortgage applications in Taipei City and some areas of New Taipei City (新北市) to help the government rein in soaring housing prices in those locations.
The FSC said it would talk with banks that have increased their mortgage lending and demand remediation plans, if necessary.
Home loans and construction financing hit new records at NT$5.28 trillion and NT$1.4 trillion respectively at the end of December, the central bank said on Tuesday last week.
Money for home renovations showed a modest decline to NT$482.92 billion in December, from NT$493.22 billion a month earlier, the central bank’s data showed.
The commission said some state-run lenders may see an increase in mortgage lending because of the government’s policy of encouraging first-time home buyers through the provision of easier borrowing terms.
First Commercial Bank (第一銀) and Hua Nan Commercial Bank (華南銀), the banking arms of First Financial Holding Co (第一金控) and Hua Nan Financial Holding Co (華南金控), have introduced lower interest rates for mortgage applications from first-time home buyers.
State-run lenders have said that they expect mortgage lending to stay flat or see slight growth this year from last year. Housing transactions last year slumped to an eight-year low.