• By Kao Shih-ching / employee reporter

Despite the central bank’s credit tightening, home and construction loans rose to NT $ 8.16 trillion ($ 292.4 billion) and NT $ 2.87 trillion, respectively, in March, extending the previous month’s upward trend, according to data from the Financial Commissioner showed on Thursday.

Home loans rose NT $ 54.4 billion, or 0.6 percent, month-over-month in March, well above the NT $ 25.3 or 0.3 percent increase in February, the data showed.

Construction loans, an indicator of real estate developers’ confidence in the sector, also grew faster in March, increasing NT $ 23.2 billion, or 0.8 percent, compared to earnings of NT $ 18.1 billion in February.

The sustained surge in mortgage and construction credit has raised questions about whether the central bank’s selective credit controls have been effective in slowing an overheated real estate market.

The bank bureau’s deputy general manager Lin Chih-chi (林志吉) said the central bank’s credit controls may not have an immediate impact on mortgage and construction loans as most banks have contracts with construction companies to offer a fixed amount.

Banks would not terminate the contracts and would no longer offer funding to companies during construction, Lin said at a news conference in New Taipei City.

The integrated income tax on home and land transactions, due to go into effect July 1, should help curb property speculation and slow down mortgage and home improvement loans. The Commission will continue to monitor the situation.

Bad home loans stood at NT $ 9.6 billion at the end of March, unchanged from the previous month, while the nonperforming loan (NPL) rate remained unchanged at 0.12 percent, commission data showed.

NPLs rose from NT $ 4.2 billion in the previous month to NT $ 4.6 billion at the end of March, increasing the NPL ratio from 0.15 percent to 0.16 percent.

Central bank governor Yang Chin-long (楊金龍) said last month that he would not rule out further credit controls to cool the property market as property prices, transaction volumes and home loans continue to surge.

Yang said he would consider capping the loan-to-value ratio to 50 percent for individual second home owners who have so far been exempt from tightening measures.

Comments are moderated. Keep comments that are relevant to the article. Comments containing abusive and obscene language, personal attacks of any kind or advertising will be removed and the user blocked. The final decision is at the discretion of the Taipei Times.