Interest rates for new mortgages in January climbed to a seven-year high of 1.953 percent at the nation’s five major state-run banks, while new house loans fell to a four-year low, as rising borrowing costs cooled the property market, the central bank said.
The monetary policymaker announced its observations after compiling mortgage loan data from 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).
As private lenders usually take cues from the state-run banks when setting interest rates and risk premiums, their interest rates for mortgages could have already exceeded the 2 percent mark and might climb higher if the central bank raises interest rates again this month.
Photo: Hsu Yi-ping, Taipei Times
The five state-run lenders, which account for 40 percent of housing loans in Taiwan, charged higher borrowing costs following the central bank’s 0.125 percentage point rate hike in December last year, it said.
New house loans totaled NT$36.95 billion (US$1.21 billion) in January, the lowest since March 2019 and a 42.7 percent slump from December, the central bank said, attributing the drop to a weakening market and fewer working days.
The number of working days dropped to 16, compared with 22 days in December and 21 days a year earlier, due to the timing of the Lunar New Year holiday, it said.
The central bank declined to speculate on the trend last month, citing poor sentiment and continued holiday disruptions due to the 228 Memorial Day long weekend.
It is better to combine the data from January and last month to eliminate the holiday effect and gain a better understanding of market movements, it said.
Major property brokers have reported a decline in transactions last month, although buying interest rose slightly after the Lunar New Year holiday.
Housing transactions in the nation’s six special municipalities sank 47.5 percent year-on-year in January and plunged 38.4 percent from a month earlier.
The influence of interest rate hikes likely persisted last month, as some banks make adjustments on a quarterly basis, the central bank said.
State-run lenders are conservative about mortgage operations this year on concern that an upcoming ban on transfers of presale housing purchase agreements would restrain potential buyers and sellers.
Interest rates for new consumer loans in January gained 30.1 basis points to a 10-year high of 3.063 percent, after the seasonal effect of student loans faded, the central bank said.
Student loans have low borrowing costs and weigh on the interest rates of consumer loans in November and December, the central bank said.
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