Mortgage interest rates last quarter spiked to a 15-year high of 2.23 percent despite a decline in loan applications, as local lenders slowed real-estate lending to support the central bank’s credit controls, Taiwan Realty Co (台灣房屋) said yesterday.
“The data suggests that buying a home is growing increasingly difficult,” the brokers said, citing data from the Joint Credit Information Center (聯徵中心).
The uptick in mortgage burdens came even though the central bank left its policy rates unchanged in the past two quarters and hiked the lenders’ required reserve ratios to drain money from the market, head researcher Charlene Chang (張旭嵐) said.
Photo: CNA
Further, the monetary policymaker tightened lending terms for non-first houses nationwide to pre-empt a housing bubble, as house loans neared the record high of the financial crisis in 2009.
The average mortgage burden stood at NT$10.43 million (US$320,844) across Taiwan, while the number of mortgages shrank by 6.5 percent, or 4,235, to 60,908 during the July-to-September period, Chang said, adding that mortgage burdens in Taipei are higher at NT$18.32 million, consistent with the capital city’s unaffordable house prices.
The decrease in loan applications showed the selective credit controls succeeded in cooling real-estate lending and the impact would grow more evident this quarter and beyond, Chang said.
It would now take three to four months for lenders to review mortgage applications, from one to one-and-a-half months before the tightening, Sinyi Realty Inc (信義房屋) said, adding that lenders raised borrowing costs to discourage prospective buyers and moderate mortgage operation.
Consequently, the central bank might choose to stay put in its board meeting next week and give the market more time to assimilate to its credit controls, Sinyi said.
The current quarter is traditionally the high season for the housing market, but a slowdown appears inevitable, Taiwan Realty said.
Developers have generally turned conservative about launching presale projects next year and indicated plans to trim price tags in areas with heavy supply, Chang said.
Huaku Development Co (華固建設) said on Wednesday that it and peers would adopt a low-key business approach, a departure from the bull market in the first half of this year.
The strategy suggests a decline in the volume of presale projects and new houses next year, Huaku chairman Chung Jung-chang (鍾榮昌) said, predicting that house prices would hold steady in Taipei and New Taipei City, but would drop 5 percent to 10 percent elsewhere.
Property researcher My Housing Monthly (住展雜誌) said the conservative practices stem from soft demand rather than an attempt to appease the central bank.
Unsold house projects last month soared to 1,017 in northern Taiwan alone, with the most difficulty in Yilan and Taoyuan, the publication said.
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