Taiwan's Housing Market Continues Consolidation as New Mortgages from 5 Major Banks Decline in April After Minor Easing

(CNA, Taipei, 21st, by reporter Pan Tzu-yu) Following the Central Bank's minor easing of housing market regulations in its Q1 board meeting, there has been keen interest in its impact on the market. Data released by the Central Bank today showed that new mortgage lending by the five major banks did not significantly increase in April; instead, it decreased by NT$5.688 billion month-over-month. A central bank official stated that the bank's intention was never to reverse the housing market's atmosphere but to continue a "soft landing" policy focused on stability.
According to Central Bank statistics, the weighted average interest rate for new loans from the five major banks (Bank of Taiwan, Taiwan Cooperative Bank, First Commercial Bank, Hua Nan Bank, and Land Bank of Taiwan) was 2.206% in April, a monthly increase of 0.101 percentage points. This was mainly due to a rise in interest rates across all loan types, especially for working capital loans.
Looking at the most-watched category, housing loans, the new mortgage lending by the five major banks in April amounted to NT$53.336 billion, a decrease of NT$5.688 billion from the previous month. The mortgage interest rate slightly increased by 0.001 percentage points to 2.307%.
Yeh Sheng, Deputy Director of the Central Bank's Department of Economic Research, explained that the number of building and land sale transactions in the six special municipalities fell by 14.2% in April, leading to a contraction in transaction volume, which in turn affected the decline in new mortgages from the five major banks. On the other hand, the housing market continues to consolidate, and public interest in purchasing homes is relatively low.
Furthermore, in response to public petitions for second-home loans for family or personal use, the Central Bank's board decided in March to adjust the nationwide loan-to-value (LTV) ratio cap for a natural person's second home, raising it from 50% to 60%. When asked by the media how to interpret the decline in new mortgage data in April after the Central Bank's "minor easing" of selective credit controls, Yeh Sheng provided his perspective.
Yeh stated that the Central Bank only made a minor adjustment to the control measures precisely because it did not want policy changes to alter the housing market's atmosphere. "If house prices were to climb higher again, that is not something we would be happy to see," he said.
Yeh pointed out that the housing market's continued consolidation is in line with the Central Bank's desired "soft landing" tone, hoping for market stability.
However, while the housing market's volume has shrunk, house prices have reached new highs. The Sinyi Home Price Index for April was 181.36, a new historical high. Regarding this, Yeh commented that housing prices in the greater Taipei area are sticky and not easily adjusted downwards, but their growth is also relatively limited. A closer look at different areas reveals mixed results with both price increases and decreases.
As for the New Youth Anshin Housing Loan program, Central Bank statistics show that the five major banks approved NT$229 billion in these loans in April. Although the amount decreased from March, its share of total new mortgages slightly rose to 42.91% because the overall drop in new mortgages was more significant.
Yeh stated that with the New Youth Anshin program nearing its expiration, many prospective homebuyers have already taken out loans, and therefore the scale...