STEADY INCREASE:
A continued surge in housing prices has led to the growing popularity of 30-year mortgages, which increase buyers’ purchasing power
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By Hsu Yi-ping and William Hetherington / Staff reporter, with staff writer
The average repayment term for new mortgages nationwide reached a nearly 15-year high last year, the latest data from the Ministry of the Interior showed.
According to the ministry’s real-estate information platform, the average repayment period for new mortgages nationwide was still under 240 months (about 20 years) before the second quarter of 2015. However, starting from the third quarter of 2023, it surpassed 300 months (about 25 years) and has been steadily increasing. In the third quarter of last year, it reached 321 months (about 26.5 years), marking the longest average repayment period since records began in the first quarter of 2008.
In the third quarter of last year, the average mortgage repayment period for all six special metropolitans and Hsinchu County surpassed 25 years, the data showed.
Photo: Lai Hsiao-tung, Taipei Times
With the exception of Taipei, where the average was about 25.58 years, the rest all had repayment periods of 27 years or more. Additionally, the average mortgage repayment period in these regions has remained above 25 years for nine consecutive quarters.
Sinyi Realty research division project manager Tseng Ching-te (曾敬德) said the continued surge in housing prices has been largely supported by 30-year mortgages, which have become a key source of funding driving market demand.
Such mortgages help reduce monthly repayment burdens while increasing buyers’ ability to afford higher home prices, he said.
Areas with longer mortgage terms likely have a larger supply of newly built housing and younger buyers, he added.
However, Taipei stood out as an outlier, recording both the highest housing prices and the shortest mortgage terms.
“This is unlikely to be due to banks being unwilling to lend, but rather because buyers tend to be older and have stronger financial capacity, making them less willing to take on long-term debt,” he said.
Colliers International owner-occupier services director Huang Shu-wei (黃舒衛) said the government’s preferential housing loan program for young homebuyer breaks two major barriers:
First, it offers a maximum loan term of 40 years with an extended grace period; second, it is limited to first-time homebuyers, increasing the proportion of young homebuyers and also extending the repayment period.
Additionally, the seventh wave of credit controls by the central bank has reduced the number of homeowners without loans and second-home loans nationwide, driving demand in response to market and structural changes in the system, he said, adding that as a result, loan application periods have been lengthening.
“As housing prices have risen, buyers have increasingly relied on long-term mortgages, sometimes combined with grace periods to ease initial repayment pressure,” he said. “However, after four consecutive interest rate hikes and rising living costs due to inflation, households are also feeling a noticeable increase in monthly expenses.”
Separate data from the ministry showed the average interest rate on new mortgages nationwide has also been rising, exceeding 2.5 percent for four consecutive quarters.
The average rate for new mortgages in the third quarter of last year was about 2.67 percent, down slightly by 0.01 percentage points from the previous quarter, but still the second-highest level since 2009, the data showed.
Huang said mortgage rates have reached their highest levels in that period for three main reasons.
First, the central bank has implemented selective credit controls. Second, a global wave of rate hikes since 2022 to curb inflation has raised the baseline for interest rates. Third, Article 72-2 of the Banking Act (銀行法) has pushed banks close to their lending caps, tightening liquidity.
As a result, banks have adopted a “price over volume” approach — raising rates to limit lending, he said. Even with ultra-low-rate programs for young homebuyers offsetting some pressure, inflation risks linked to conflict in the Middle East have kept mortgage rates on an upward trend, he said.
Tseng said the floor rate for mortgages is about 2.185 percent, but most banks are offering rates of around 2.5 percent to first-time homebuyers.
This is largely because the mortgage market currently favors lenders, with demand for 2.5 percent first-time buyer loans exceeding supply, pushing the latest average mortgage rate up to 2.67 percent — a relatively high level compared with the past.