As new home mortgages granted by Taiwan’s five major state-run banks reached a five-month high, the average interest rate on new housing loans hit a record low, central bank data released on Tuesday showed.
Total new mortgages granted by Bank of Taiwan (臺灣銀行), Land Bank of Taiwan (土地銀行), Taiwan Cooperative Bank (合作金庫銀行), Hua Nan Commercial Bank (華南銀行) and First Commercial Bank (第一銀行) increased 20.06 percent month-on-month and 31.56 percent year-on-year to NT$60.41 billion (US$2.01 billion) last month, the data showed.
Total new mortgages extended by the five banks for all of last year amounted to NT$592.55 billion, the highest since August in 2011.
The rise in mortgages reflected that December is usually the peak month for the domestic housing market.
It was also in line with the latest housing transaction data released by the six major municipalities, which show that transactions rose 13.3 percent month-on-month and 24.4 percent year-on-year in the six cities to 22,316 units last month, with Taichung posting the highest monthly growth of 30.8 percent and Taoyuan reporting the biggest annual increase of 50 percent, according to local governments’ tallies.
The total number of housing transactions in the six major municipalities increased 9.4 percent to 232,031 units last year from a year ago.
Despite rising mortgage demand, the five banks’ average mortgage rate fell to 1.608 percent per year last month, which was down from the previous month’s 1.617 percent and the lowest on record, the central bank data showed.
The central bank attributed the situation to lenders competing with each other to offer preferential rates for quality clients, the Chinese-language Liberty Times (the Taipei Times’ sister newspaper) reported on Wednesday.
Some local lenders were reportedly offering mortgage rates as low as 1.56 percent annually for military personnel, civil servants and public school teachers, while rates for others were around 1.6 percent, the newspaper said, citing central bank officials.
Demand for mortgages was fueled by the current housing market being mostly focused on owner-occupied or self-use homes while the general performance of the housing market last year was stable, the Liberty Times reported, citing central bank officials.
Separately, the five state-run banks last month saw their average lending rates fall to 1.398 percent, down 0.017 percentage points from 1.415 percent in November, which the central bank attributed to a decline of 0.184 percentage points in the interest rate associated with capital expenditure loans to 1.633 percent.
Thanks to the need for funds by returning Taiwanese companies, capital expenditure loans totaled NT$800.05 billion last year, the highest on record, while the average capital expenditure lending rate was 1.81 percent, the lowest since 2011, central bank data showed.
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