The central bank met with eight local lenders on Thursday to call for restraint in real-estate financing, which approached a record high in September, sparking concern that it might drive up property prices.
The meeting came less than a week after the monetary policymaker’s talks on Friday last week with six mortgage operators to convey its concern over loose lending.
“Banks should better manage their resources to prevent an overflow of credit to the real-estate market, which indirectly encourages property speculation and land hoarding, and contributes to property price hikes,” the bank said in a statement.
Photo: Wu Chi-lun, Taipei Times
Government data showed that commercial property and land deals last quarter soared at paces rarely seen in recent years, bucking sharp declines around the world amid the COVID-19 pandemic.
Property analysts have attributed the fast pickup to Taiwan’s stable economy and quick control of the outbreak, with low interest rates and ample liquidity also lending support.
The central bank in March cut the rediscount rate to a record low of 1.125 percent to ease households’ financial burden, but that inadvertently became an incentive for property investment after Taiwan emerged from the outbreak in May.
As of September, real-estate lending stood at 35.8 percent of total outstanding loans, close to the historical peak of 37.9 percent, the central bank said, adding that several banks are approaching the limits for mortgage, construction and land financing.
Local banks have offered generous loans at cutthroat borrowing costs and with protracted grace periods, as they vie for customers, the bank said.
Lax lending includes unreasonable loan-to-value ratios, failing to monitor the progress of property developments and easy loans for unsold housing units, it said.
Such practices encourage land hoarding and excessive leveraging that are pushing up property prices, posing a threat to the health of the nation’s property market and financial system, the bank said.
“Lenders must take up their social responsibility and guide funds to real investment that can create job opportunities and boost income rather than overly concentrating on property lending,” the bank said.
Small and medium-sized companies affected by the pandemic can use help from financial institutions, it said.
Central bank Deputy Governor Chen Nan-kuang (陳南光) has several times expressed concern over the formation of a property bubble and pressed for pre-emptive measures to reverse the trend.
The central bank said it has sent officials to visit lenders to see if they exercise due caution when handling real-estate loan requests.
It denied that such visits are “formal inspections.”
ELECTRONICS BOOST: A predicted surge in exports would likely be driven by ICT products, exports of which have soared 84.7 percent from a year earlier, DBS said DBS Bank Ltd (星展銀行) yesterday raised its GDP growth forecast for Taiwan this year to 4 percent from 3 percent, citing robust demand for artificial intelligence (AI)-related exports and accelerated shipment activity, which are expected to offset potential headwinds from US tariffs. “Our GDP growth forecast for 2025 is revised up to 4 percent from 3 percent to reflect front-loaded exports and strong AI demand,” Singapore-based DBS senior economist Ma Tieying (馬鐵英) said in an online briefing. Taiwan’s second-quarter performance beat expectations, with GDP growth likely surpassing 5 percent, driven by a 34.1 percent year-on-year increase in exports, Ma said, citing government
‘REMARKABLE SHOWING’: The economy likely grew 5 percent in the first half of the year, although it would likely taper off significantly, TIER economist Gordon Sun said The Taiwan Institute of Economic Research (TIER) yesterday raised Taiwan’s GDP growth forecast for this year to 3.02 percent, citing robust export-driven expansion in the first half that is likely to give way to a notable slowdown later in the year as the front-loading of global shipments fades. The revised projection marks an upward adjustment of 0.11 percentage points from April’s estimate, driven by a surge in exports and corporate inventory buildup ahead of possible US tariff hikes, TIER economist Gordon Sun (孫明德) told a news conference in Taipei. Taiwan’s economy likely grew more than 5 percent in the first six months
SMART MANUFACTURING: The company aims to have its production close to the market end, but attracting investment is still a challenge, the firm’s president said Delta Electronics Inc (台達電) yesterday said its long-term global production plan would stay unchanged amid geopolitical and tariff policy uncertainties, citing its diversified global deployment. With operations in Taiwan, Thailand, China, India, Europe and the US, Delta follows a “produce at the market end” strategy and bases its production on customer demand, with major site plans unchanged, Delta president Simon Chang (張訓海) said on the sidelines of a company event yesterday. Thailand would remain Delta’s second headquarters, as stated in its first-quarter earnings conference, with its plant there adopting a full smart manufacturing system, Chang said. Thailand is the firm’s second-largest overseas
Taiwan Semiconductor Manufacturing Co’s (TSMC, 台積電) market value closed above US$1 trillion for the first time in Taipei last week, with a raised sales forecast driven by robust artificial intelligence (AI) demand. TSMC saw its Taiwanese shares climb to a record high on Friday, a near 50 percent rise from an April low. That has made it the first Asian stock worth more than US$1 trillion, since PetroChina Co (中國石油天然氣) briefly reached the milestone in 2007. As investors turned calm after their aggressive buying on Friday, amid optimism over the chipmaker’s business outlook, TSMC lost 0.43 percent to close at NT$1,150
RSS