The average interest rate of new loans extended by the five major mortgage providers last month rose to the highest level since July 2016, as banks seemed to be prudent in extending mortgages amid a slowdown in the housing market and the central bank raising interest rates.
The average mortgage rate of the five — Bank of Taiwan (台灣銀行), 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) — rose 0.089 percentage points to 1.703 percent last month from June, data released by the central bank showed yesterday.
New house loans fell to NT$55.89 billion (US$1.85 billion) last month, down NT$4.81 billion from June and marking a second consecutive month of decline, the central bank said.
Photo: Hsu Yi-ping, Taipei Times
The central bank said the continued decline in new house loans indicated that interest rate increases had successfully cooled buying interest and slowed price increases.
House prices in Taipei and New Taipei City gained 6.96 percent year-on-year last month after rising 7.49 percent in June, while housing transactions in the area decreased 6.73 percent in June and tumbled 13.27 percent last month, the central bank said.
The retreat was also due to banks turning cautious amid rising economic uncertainty, it added.
Separately, average interest rates on new loans extended by the five major state-run banks last month gained 0.035 percentage points to 1.475 percent, the highest since May 2018, as lenders raised borrowing costs to reflect increased interest rates, the central bank said.
That came after the central bank raised the discount rate by 0.125 percentage points in June to fight inflation, and narrow the rate gap between Taiwan and the US.
Widening rate differences have prompted capital outflows and weighed on the local bourse and the New Taiwan dollar, which yesterday shed another NT$0.109 to close at NT$30.204 against the US dollar, the lowest level since April 2020.
The central bank said lenders have not yet fully assimilated the latest rate increases to honor seasonal loan agreements.
It would take a few months for lenders under such agreements to increase lending rates, the central bank said, predicting that overall interest rates would increase again this month.
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