Housing and construction loans rose to their highest levels at the end of last month at NT$8.1 trillion (US$283.2 billion) and NT$2.83 trillion respectively, but their rate of increase slowed after the central bank tightened credit controls, the Financial Supervisory Commission (FSC) said on Thursday.
Housing loans rose 0.3 percent, or NT$25.3 billion, from NT$8.08 trillion at the end of January, easing from a monthly growth of 0.7 percent in January and marking the smallest increase since August last year, commission data showed.
Construction loans, an indicator of real-estate developers’ confidence in the sector, also grew at a slower pace last month with monthly rise of NT$18.1 billion, or 0.6 percent, compared with a monthly growth of NT$40.7 billion in January, the data showed.
Continuing rises in mortgage and constructions loans have prompted some people question whether the central bank’s selective credit controls have effectively curbed the overheating property market since they took effect on Dec. 8 last year.
“Mortgage and construction loans rising at a slower rate suggests that the tightened credit controls have affected lending momentum,” FSC Banking Bureau Deputy Director-General Lin Chih-chi (林志吉) told a news conference in New Taipei City.
“However, it will take time before we see a drop in mortgage and construction loans, as some banks have contracts with real-estate developers with set lending goals. If the banks stick to the contracts, they will not refrain from offering new loans in the short term,” Lin said.
The central bank further tightened its credit controls on Friday last week, which might curb growth in mortgage and construction loans, the commission said.
The credit controls do not affect first-time home buyers, but they affect corporate and individual property investors, and highly leveraged borrowers by lowering the loan-to-value limit to 40 percent for all corporate buyers and 55 percent for multiple-home owners.
Some lenders, such as CTBC Bank (中信銀行), have told investors that the tightened credit measures would have a limited impact on its mortgage business, as the majority of their customers own one home.
Nonperforming housing loans totaled NT$9.8 billion at the end of last month, up from NT$9.7 billion a month earlier, while the nonperforming loan ratio remained flat at 0.12 percent, FSC data showed.
Nonperforming construction loans rose from NT$4.1 billion a month earlier to NT$4.2 billion at the end of last month, while the nonperforming loan ratio was flat at 0.15 percent, the data showed.
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