Taiwan`s state-run banks expects downtrend in its mortgage lending

The central bank has directed banks to strictly screen mortgage applicants to help cool the soaring real estate market.

Complying with the government`s policy to cool the overheated real estate market, Taiwan`s state-run banks have tightened up mortgage lending, resulting in a downtrend of such loans.

The five government-linked major mortgage lenders, namely, Land Bank of Taiwan (LBT), Taiwan Cooperative Bank, Bank of Taiwan (BOT), First Commercial Bank, and Hua Nan Bank, approved new mortgages totaling NT$41 billion (US$1.28 billion) in October, down by NT$1.7 billion (US$53.13 million) from a month earlier for the fourth consecutive monthly fall.

Nevertheless, the island`s total outstanding mortgages kept growing to NT$5.075 trillion (US$158.6 billion) in September from NT$4.92 trillion (US$153.75 billion) recorded at the beginning of the year, suggesting that mainly private banks have been active in the mortgage market despite the central bank`s policy.

Market observers says that since the beginning of this year the central bank has directed domestic banks to more strictly screen mortgage applicants to help cool the soaring real estate market. However, some applicants rejected by the government-linked banks turn to private ones that are more profit-driven.

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