Rising home prices and interest rates have prompted more people to sign up for 30-year mortgages to ease monthly debt payments, Sinyi Realty Inc (信義房屋) said yesterday.
The average mortgage length climbed to a record-high 297 months, or 24.75 years, in the fourth quarter of last year, from 291 months in the previous quarter, indicating that 30-year mortgages have become mainstream, Sinyi Realty research manager Tseng Ching-der (曾敬德) said, citing data from the Ministry of Interior’s real-estate information platform.
That means that people who buy homes at age 40 would have to pay mortgages until they turn 70, Tseng said.
Photo: CNA
Older Taiwanese liked to pay mortgages ahead of schedule to save on interest payments, but people today prefer to take advantage of Taiwan’s low interest-rate environment and extend mortgages to own a home, the analyst said.
Interest rates on mortgages were about 1.3 percent for a long time before the central bank started to tighten its monetary policy in March last year to contain inflation, Sinyi said.
Twenty-year mortgages used to be the home loan of choice and many borrowers paid way in advance, consistent with Taiwan’s high savings rates, Tseng said.
The new mindset is especially evident among young buyers of new homes in New Taipei City, Taichung and Hsinchu City, where mortgages average more than 300 months, he said.
Newly completed homes have favorable lending terms with assistance from property development companies, he said, adding that young people consider 30-year mortgages acceptable.
Rising home prices make 30-year mortgages more attractive, as they require lower monthly payments, Tseng said.
The monthly payment for a NT$10 million (US$324,538) 30-year mortgage with an interest rate of 2.06 percent is NT$37,263, much less than NT$50,873 per month for a 20-year mortgage, he said.
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