The growth of reverse mortgages decreased last quarter, increasing just 4.6 percent to NT$23.9 billion (US$802 million) from a quarter earlier, compared with quarterly growth of 7.65 percent in the same period last year, as consumers became more conservative amid the COVID-19 pandemic, Financial Supervisory Commission (FSC) data showed.
The number of reverse mortgage applications rose 4.7 percent to 4,272 at the end of March, from 4,080 at the end of last year, the data showed.
Reverse mortgages allow homeowners to use their property as collateral to borrow money. Most banks require borrowers to be older than 60 to qualify.
“It is not surprising to see that reverse mortgages decreased in the first quarter, as the COVID-19 pandemic has changed consumers’ behaviors. Some of them have delayed making big purchases or significant financial decisions amid the economic uncertainty,” a commission official said by telephone.
Unlike credit cards, reverse mortgages are not expected to expand quickly, as only older people with property are qualified to apply for them, the official added.
It is too soon to forecast whether reverse mortgages would continue to slow, as consumers might show more interest in the loans due to the central bank’s rate cut of 25 basis points in March, which would mean lower interest payments for borrowers, the official said.
Among the 192 new loans approved in the first quarter, 98 were to homeowners in Taipei, New Taipei City and Keelung, with the number of approved loans in the greater Taipei area totaling 2,170, making up half of all loans, the data showed.
Due to high housing prices, borrowers living in the greater Taipei area could receive more money against the value of their properties, which has helped boost their willingness to apply for the loans, the commission said.
Taichung, Changhua County and Nantou County continue to rank second in terms of the accumulative number of approved loans at 618. They were followed by Taoyuan, Hsinchu and Miaoli County with 482 approvals, the data showed.
State-run banks continue to lead in issuing the loans, with Taiwan Cooperative Bank (合作金庫銀行), Land Bank of Taiwan (土地銀行) and Hua Nan Commercial Bank (華南銀行) the top three reverse mortgage lenders.
Taiwan Cooperative Bank approved 87 new loans totaling NT$413 million in the first three months, while Land Bank approved 58 new loans totaling NT$267 million and Hua Nan Commercial Bank approved 14 new loans totaling NT$82 million, the data showed.
Privately run lenders have remained on the sidelines due to concerns about credit risk and a lack of government assurance, the commission said.
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