The extra mortgage burden from the central bank on Thursday hiking the interest rate should be bearable and might help deter developers from increasing prices, brokers said yesterday.
The 0.25 percentage point rate hike would lift the mortgage interest rate to 1.65 percent from 1.4 percent, adding NT$1,200 (US$42.31) of interest expense a month for people with NT$10 million of mortgage on a 20-year payment scheme, said Tseng Ching-der (曾進德), research manager at Sinyi Realty Inc (信義房屋), the nation’s only listed broker.
“The extra burden is about the cost of a bowl of braised pork rice each day, a sacrifice that is acceptable for most home buyers,” Tseng said.
Photo: CNA
Central bank Governor Yang Chin-long (楊金龍) on Thursday said that the rate hike is intended to mitigate inflationary pressures induced by soaring crude oil and raw material prices, although he acknowledged that homeowners would be affected.
The housing market breathed a sigh of relief at the absence of additional credit controls, although it might need time to adjust to the policy change, as many were braced for more restrictions, Tseng said.
Yang told the legislature earlier this month that he had considered tightening terms for mortgages on second homes in and around Taipei to induce a soft landing for housing prices.
However, he said yesterday that he is not particularly concerned about the nation’s real-estate lending or bad loan ratios, which have stayed within healthy levels.
Rather, worsening inflation could take a toll on GDP growth if left unaddressed, he said.
Tseng said that a one-off rate hike is harmless, but a series of increases might dampen home buying interest.
Yang refused to give guidance, saying that economic data would shape policymaking.
Chinatrust Real Estate Co (中信房屋) said that the interest rate hike sent a warning to developers that have taken advantage of inflation to tout housing projects as a safe investment.
Record-low interest rates to support sectors hard hit by the COVID-19 pandemic also helped revive property investment for the past two years, the broker said.
The monetary tightening might help to stabilize housing prices, which increased by 30 percent in central and southern Taiwan, and by 10 percent in the north, it said.
Jessica Hsu (徐佳馨), head researcher at H&B Realty Co (住商不動產), said property investors such as landlords might seek to pass the extra mortgage burden onto their tenants, citing cost concerns.
Great Home Realty Co (大家房屋) head researcher Mandy Lang (郎美囡) said that the monetary normalization might allow the property market to flatten this year from a boom in the past two years.
A robust economy would continue to lend support, Lang said.
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