The central bank’s latest interest rate hike is likely to rub salt in the wounds of the housing market, which has seen transactions shrink by 28.3 percent in the first two months of this year due partly to monetary tightening, analysts said on Thursday.
Interest rates on mortgages would climb higher than 2 percent, from 1.35 percent before March last year, meaning that households on 20-year mortgages of NT$10 million (US$329,457) would have to pay NT$51,182 per month, higher than monthly wages for many people in Taiwan, Evertrust Rehouse Co (永慶房屋) said.
The average monthly salary in January was NT$45,376, the Directorate-General of Budget, Accounting and Statistics said.
Photo: CNA
The rate would require an extra NT$840,000 in overall interest payments for people with 20-year mortgages and NT$1.3 million more in interest for those with 30-year mortgages, the broker said.
Households would have to tighten their belts to shoulder extra financial burdens in the absence of proportional wage increases, Evertrust said, adding that prospective buyers are likely to hesitate on joining the market.
Property transactions totaled 28,430 units in the six special municipalities in January and last month, indicating a 28.3 percent decline from the same period last year, government data showed.
The rate hike came amid speculation of a pause, denying developers a recovery from waves of selective credit controls and unfavorable policy measures, Colliers International Taiwan (高力國際) researcher Andy Huang (黃舒衛) said.
Money will continue to flow out of the property market, Huang said, adding that interest rates for land financing would rise above 3 percent and required returns on real-estate investment by life insurance companies would increase, limiting choices.
Global economic uncertainty and recent bank failures in the US and Europe would heighten risk-aversion among institutional investors, making it difficult to see property price gains this year, Huang said.
The rate hike would sharpen housing unaffordability, as people have to pay more and secure lower loans to own a house, Sinyi Realty Inc (信義房屋) said.
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