Taiwan Banks Cut Construction Loan Rates as Housing Market Cools

Taiwan’s central bank has maintained selective credit controls on real estate, curbing housing transactions and weakening developers’ demand for land and construction financing. Such loans have traditionally been an important source of corporate-banking growth, but lenders now face fewer qualified projects and tighter limits on property exposure. Banks are consequently balancing loan-volume targets against asset quality as the housing market loses momentum.

Banks have recently intensified competition for well-capitalized developers and projects with strong locations and sales prospects, pushing construction-loan rates below 3%. Major lenders are also targeting policy-backed lending tied to urban renewal, reconstruction of aging and potentially unsafe buildings, and social housing. Those projects can help banks limit the impact of regulatory caps on real-estate lending while sustaining credit growth and interest income.