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Housing Loans by 5 Gov't-linked Banks Hit New High of NT$61.45B. in January

2011/03/02 | By Judy Li

Taipei, March 2, 2011 (CENS)--Taiwan's five government-linked banks, namely Bank of Taiwan, Land Bank of Taiwan, Taiwan Cooperative Bank, Hua Nan Commercial Bank and First Commercial Bank, saw their aggregate new housing loans extended in January surge by NT$2.873 billion (US$92.68 million) from a month earlier to a record high of NT$61.447 billion (US$1.982 billion), according to statistics released by the central bank here.

Some worried that the growing housing loans might fuel the overheated real estate market here. However, Y. T. Chen, deputy director general at the central bank's Economic Research Department, believed that realty the market is cooling off as domestic banks have gradually tightened up mortgage loans, not to mention that the government has worked out measures to curb speculations in the market.

Chen explained that the increase in home-purchasing loans extended by the above-mentioned five banks in January was caused by a preferential shelter loan program, worked out last December by the government to help financially-weak young people purchase houses. The five banks therefore appropriated funds totaling NT$10 billion (US$322.581 million) in January to support the program.

To get the housing market back on normal track, the central bank has recently raised interest rates, making domestic banks hike their lending rates. Besides, the central bank also mandated the banks to lower the proportion of the loans they intend to offer, so as to curb speculators and dampen ever-rising housing prices, Chen added.

In January the average home loan rate offered by the said five banks stood at 1.76% per annum, up 2.1 basis points (1 basis point = 0.01%) from that of a month earlier. In the same month the average lending rate offered by them for new loans was 1.422%, up 0.03 of a percentage point from 1.392% of the previous month; if excluding the preferential loans granted to government units, the rate should be 1.52%, up 0.038 of a percentage point from a month earlier.