In July, Taiwan's domestic banks reached an 18-year high in housing loans, totaling NT USD10.6 trillion (USD 331.25 billion), with a remarkable year-on-year growth rate of 10.82%. This surge is driven by post-pandemic economic recovery, increased housing demand, and competitive construction projects. Construction loans also rose to nearly NT USD 3.72 trillion (USD 116.25 billion), fueled by government-backed urban renewal initiatives and rising costs. Despite robust demand, stringent regulations and internal guidelines are in place to manage risks associated with real estate loan concentration. The surge in loans highlights the strength and resilience of Taiwan's housing and construction sectors as they continue to grow.
According to the Financial Supervisory Commission (FSC), Taiwan's domestic banks had issued a record NT 10.6 trillion USD (331.25 billion USD) in housing loans in the month of July, marking an 18-year high, This significant milestone represents a net increase of NT 616.61 billion USD in the first seven months of the year, nearly reaching 94% of the projected annual growth for 2023. Notably, July was the third consecutive month where the monthly growth in housing loans surpassed NT 100 billion USD, highlighting the sustained demand in the market. The year-on-year (YOY) growth rate for housing loans in July stood at 10.82%, the highest in more than 18 years. For the first seven months of 2023, the YOY growth rate surged to 10.84%.
Several factors contributed to this sharp increase, including the post-pandemic economic recovery, heightened demand for housing, and competition among construction projects. In parallel, construction loans also experienced an upward trend. By July, these loans had grown to nearly NT 3.72 trillion USD, reflecting a 3.54% increase from the previous year. The rise in construction loans is largely attributed to government-supported urban renewal initiatives and escalating construction costs, which have driven a need for increased working capital. To mitigate the risks associated with an overconcentration of real estate loans, Taiwanese regulations limit commercial banks' total loans for residential and commercial construction to 30% of their deposits and financial bonds. However, many banks adopt even stricter internal guidelines to manage these risks effectively.
As of July, the total amount of loans issued for residential and commercial construction by 36 domestic banks, excluding the Land Bank of Taiwan and the Export-Import Bank of the Republic of China, increased by NT 0.15 trillion USD, bringing the total to NT 14.86 trillion USD. Additionally, the total deposits and financial bonds issued by these banks saw a rise of NT 0.58 trillion, reaching NT 55.85 trillion USD.
In conclusion, Taiwan's domestic banks have experienced a significant surge in housing and construction loans, driven by post-pandemic economic recovery, increased housing demand, and competitive construction projects. By July, housing loans reached an 18-year high of NT 10.6 trillion USD (331.25 billion USD), with a remarkable year-on-year growth rate of 10.82%. Concurrently, construction loans rose to NT 3.72 trillion USD (116.25 billion USD), fuelled by government-backed urban renewal initiatives and rising costs. Despite the robust demand, regulatory measures and stringent internal guidelines are in place to manage the risks associated with real estate loan concentration, reflecting a strong and resilient housing and construction sector in Taiwan.
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