According to China Jingwei.com, after the U.S. Federal Reserve recently announced a 2-point interest rate hike, the Taiwan authorities' monetary policy regulatory agency decided on the 15th to raise policy interest rates by half a yard (0.125 percentage points). Yang Jinlong, the head of the agency, said that the tone of this monetary policy adjustment is "moderate tightening" and hinted that there is still the possibility of interest rate in the first quarter of 2023. In this regard, some Taiwanese netizens pointed out, "The monthly mortgage loan of tens of millions of dollars is more than NT$3,000 (the same below), which is very stressful." Xu Jiaxin, a real estate expert on the island, also pointed out that the situation next year may be even less optimistic.
According to reports from Taiwan's "Central News Agency" and " United News Network ", the Taiwan authorities' monetary policy authority held a meeting that day and decided to raise interest rates. The discount rate, guaranteed loan financing interest rate and short-term financing interest rate were adjusted from annual interest 21.625%, 2% and 3.875% to 1.75%, 2.125% and 4% respectively, which will be implemented from December 16. The agency also lowered Taiwan's economic growth rate in 2022 to 2.91% and in 2023 to 2.53%. It is estimated that the local consumer price index (CPI) and core CPI in 2023 will increase by 21.88% and 1.87% year-on-year respectively.
The person in charge of the above-mentioned agency said that monetary policy depends on economic data, and monetary policy authorities must ensure that the inflation rate is below 2%. The agency predicts that the CPI and core CPI growth rates in the first quarter of 2023 will be 2.35% and 2.44% respectively, and will only drop to 1.64% and 1.93% in the second quarter. This suggests that an interest rate hike is still possible in the first quarter of 2023.
The Taiwan authorities’ monetary policy authority started a cycle of interest rate hikes in March this year. It first raised interest rates by 1 percentage point (0.25 percentage points) in March, and then raised interest rates by half a percentage point (0.125 percentage points) in June and September. This time, it raised interest rates by half a percentage point (0.125 percentage points), with four consecutive increases totaling 0.625 percentage points. Chasing the Bay Area's largest single-year increase this century has also made homebuyers' pockets shrink.
According to a trial calculation of housing in Taiwan, for a home buyer who uses principal and interest amortization, no grace period, and a loan of tens of millions, after the interest rate is raised by 2.5%, the monthly repayment amount will be approximately 3,000 yuan more than before the interest rate increase at the beginning of the year. The increased expenditure for the whole year is 36,000 yuan, which is approximately equivalent to one month's monthly salary of a newcomer in the workplace.
After the news of the interest rate hike spread to the Internet, Taiwanese netizens who had loans to buy houses said, "Interest rates are rising! House prices are going to be cut in half! The mortgage payments can't be paid! The house bugs are going to jump off the building."
However, some netizens pointed out that the current problem of Taiwan's real estate market is that it is too cold. The result of the interest rate increase may make more potential home buyers turn to wait and see, stressing that "if the market continues to rise, the market will continue to be cold" and "those who will wait and see are not for the interest, but in the hope that the price of new homes in the market will fall." Some people are optimistic about the interest rate increase, saying that "it is not painful, and it will not be sold at a higher price" and "being able to save money means that there is still room for growth in mortgage loans."
Island real estate expert Xu Jiaxin analyzed that although the half-digit interest rate increase this time is not significant, it has been raised four times this year. Boiled frogs in warm water have made it difficult for Taiwanese people who have various loans. Although mortgage interest rates are still at historically low levels, the increase in policy interest rates affects not only mortgages, but also includes housing-based pensions, life insurance industry investment real estate standards, etc., which is profound. "If we go by the Fed's statement yesterday that interest rates will be cut in 2024, it means that everyone will have to work harder next year." Chen Dingzhong, senior manager of the Taiwan Housing Group Trend Center, pointed out that rising interest rates have put pressure on mortgage loans, and many people are looking forward to "salary increases" to subsidize them. However, according to the latest salary statistics from the "General Accounting Office", the average monthly recurring salary of employees in Taiwan in 2022 is currently 44,339 yuan. Compared with last year's 43,209 yuan, it only increased by 1,130 yuan, which is nearly three times the monthly increase in mortgage loans of 3,000 yuan. In other words, it would take a threefold salary increase to make up for the increase in mortgage loans caused by interest rate increases. For most salaried people, the possibility is really low. (Source: China Jingwei Network)
