Interest rates on new loans at the nation’s five major state-run banks last month edged up 3.6 basis points from a month earlier as lenders raised borrowing costs to support monetary tightening by the central bank.
The uptrend came after the central bank on Sept. 22 raised the policy rediscount rate by 12.5 basis points and the required reserve ratio of banks by 25 basis points in a bid to tame inflation.
The move prompted the 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) to increase interest rates on mortgages, as well as consumer and capital loans.
Private lenders take their cues from state-run lenders in setting interest rates.
Interest rates on new mortgages climbed to 1.731 percent, the highest since April 2016, and would rise further, as some lenders have not yet fully adjusted their rates, the central bank said.
That means interest rates on mortgages might rise above 1.8 percent this month or next month and would approach 2 percent if the central bank hikes rates again in December, property brokers have said.
Mortgage operations totaled NT$54.72 billion (US$1.7 billion), an increase of NT$4.07 billion after some buyers postponed payments from August to last month to avoid transactions over Ghost Month, the central bank said.
Property deals last month lost more momentum from a month earlier and the same month last year as economic uncertainty drove potential buyers to the sidelines, it said.
The weak sentiment also weighed on capital and consumer loan operations, with companies becoming conservative about investment and people growing uneasy about rising borrowing costs, it said.
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