Interest rates for new loans at the nation’s five major state-run banks last month edged up 0.005 percentage points to 1.44 percent on average, as lenders raised borrowing costs to support monetary tightening in a joint bid to curb inflation, the central bank said July 22.

The rate hike came after the central bank last month raised the rediscount rate by 0.125 percentage points for the second time this year to mitigate inflationary pressures.

Bank of Taiwan, Land Bank of Taiwan, Taiwan Cooperative Bank, Hua Nan Commercial Bank and First Commercial Bank followed suit, hiking interest rates for mortgages, consumer and capital loans.

Interest rates for new mortgages climbed to 1.614 percent in June, the seventh straight month of increases to the highest in two-and-a-half years and should rise further this month as lenders have not fully reflected the latest rate hike, the central bank said.

New mortgage operations softened by NT$7.88 billion (US$263.4 million) to NT$60.7 billion as interest rate hikes and other unfavorable factors cooled buying interest, the central bank said, adding that lenders also exercised caution and tamed mortgage operations.

That is partly why housing transactions in the nation’s six special municipalities last month shrank 14.88 percent from a year earlier, it said.

Interest rates for capital funding gained 0.347 percentage points to 1.905 percent, while interest rates for consumer loans picked up 0.165 percentage points, the central bank said.

Consumer lending dropped by NT$2.15 billion mainly because demand for student loans weakened, which was consistent with seasonality, it said.

Taipei Times