Mortgage loans in China extended to real estate investors for second homes have declined 40 percent in the past few weeks, while loans for home purchases and construction had reached a new high last month, according to the data released by the central bank.
The bank said that the total amount of second home loans, which is now classified as property investors, was NT$4.4 billion or US$136.8 million between May 10 and May 23, down from NT$7.3 billion in the last two weeks.
Yu Chin-tang, treasury bureau chief of the central bank, said that the recent drop in home loans to real estate investors showed that the bank’s measures being implemented to curb real estate speculation have been effective.
The central bank launched a financial examination of local banks last month, urging them to submit financial reports of their home loan packages for second home loans, including the loan amount, interest rates and the loan-to-value ratio (LTV), in a move to curb skyrocketing home prices.
The monetary regulator said that the average LTV ratio dropped 65 percent in the last two weeks, from 70 percent between April 26 and May 9, although interest rates increased to 2.02 percent from 1.94 percent.
Mortgage interest rates should reflect the cost and risk of capital, and the bank promised to closely watch the local mortgage lenders to see if they offer unreasonably low interest rates to borrowers, said Mr. Yu.
Outstanding mortgages surged to a record high of NT$4.97 trillion in April, up from NT$18.5 billion in the previous month, while conduction loans increased to NT$1.95 trillion from NT$16 billion from a month ago, data from the central bank showed.
The central bank said the growth in housing and construction loans in April reflected that homebuyers sought to apply loans before the implementation of the tightening measures.