Taiwanese banks extended a record NT$4 trillion, or US$126 billion, in loans during the first seven months of the year. The borrowing surge triggered credit rationing across the island.

Demand for working capital from suppliers serving Nvidia Corp and Microsoft Corp pushed monthly bank lending to an all-time high of NT$1.04 trillion in July. That upended years of low interest rates.

Local lenders raised corporate borrowing rates between 50 and 90 basis points. Margins for top-tier syndicated corporate facilities climbed 10 to 20 basis points. Mortgage rates reached almost 3 percent across the island, up from 2.2 percent a year earlier. Tech manufacturers need quick cash to secure semiconductor components, build inventory, and expand production lines for orders linked to Taiwan Semiconductor Manufacturing Co and global artificial intelligence infrastructure programs. Many suppliers now demand loan approvals within two months, cutting a third off the standard 90-day evaluation window.

Working capital loans to businesses and individual borrowers rose by NT$823 billion in July alone. That expanded nearly eight times faster than residential mortgage growth. The spike pushed the banking system loan-to-deposit ratio to 72.96 percent, near its historical ceiling of 73.07 percent recorded in 2020. Average liquidity coverage ratios fell to 115.52 percent in July. While still above the statutory 100 percent threshold, it was the sharpest four-month liquidity drop in four years.

Commercial banks are shifting balance sheets toward higher-yielding corporate facilities and short-term consumer credit lines. Unsecured personal loans yield fatter spreads than residential mortgages, which face central bank cooling measures and property transaction curbs.

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