Which interest rate type should you pick
When you apply for a mortgage, banks typically offer:
- Floating rate: adjusts monthly based on an index rate (e.g., Chunghwa Post 1-year fixed deposit rate)
- Fixed rate: locked for the first few years (2–3), then reverts to floating
- Hybrid: part fixed, part floating
In Taiwan, roughly 90% of mortgages are floating or hybrid. Pure fixed-rate mortgages are rare (and usually priced above floating).
How floating rates work
Today (April 2026) a typical floating mortgage looks like:
Mortgage rate = Index rate + Rate markup
- Index rate: most use the Chunghwa Post 1-year floating deposit rate (currently ~1.5%) or the central bank fixed deposit rate
- Rate markup (加碼利率): the risk premium the bank adds based on credit, income, loan conditions (typically 0.3%–0.8%)
Example: Chunghwa Post 1.5% + markup 0.5% = mortgage 2.0%
When the index rate moves monthly, your mortgage rate moves with it (in practice, adjustments may happen monthly, quarterly, or semi-annually).
How hybrid works
Common design:
- First 2 years fixed: e.g., 2.0% locked
- Year 3 onward floating: tracks the index rate
This is bad for anyone "expecting rates to fall soon" (locks in a high), but offers stability in years 1–2.
20-year Taiwan rate history
- 2005–2008: 2.5%–3%
- 2009–2016: low-rate era, 1.5%–2%
- 2017–2021: ~1.5%–1.8%
- 2022–2024: hiking cycle, 1.8%–2.5%
Long-term average around 2%, range roughly ±0.5%.
Fixed vs floating: decision framework
Pick fixed (when available) if
- Rates are at a historical low (your current read)
- You expect rate hikes (central bank policy)
- Your finances are rate-sensitive (tight cash flow)
- You value stability over optimal math
Pick floating if
- Rates are at a historical high, you expect them to fall
- You expect the central bank to cut rates
- Your markup is low (low index → genuinely low rate)
- You have financial slack and can absorb small fluctuations
Pick hybrid (2-year fixed) if
- The most common pick, balancing both sides
- Early stability, later flexibility
- Suitable for most people
Taiwan's popular "step-up fixed" option
Some banks offer:
- Year 1: 1.9% fixed
- Year 2: 2.0% fixed
- Year 3 onward: floating
Character: years 1–2 are slightly above pure floating (you're paying to lock in), but it protects against sudden rate shocks.
The 2026 picture
As of early 2026, Taiwan's hiking cycle is tapering:
- Further hikes are less likely
- Mortgage rates sit near a relative high
- There's room for a drop over the next 2–3 years
One view (not advice):
- If you plan to repay quickly (within 5 years): floating may be slightly better
- If you plan to hold long-term (20+ years): hybrid is steadier, sparing you short-term anxiety
Practical details
1. Negotiating the markup
State-owned banks tend to have fixed markups; private banks negotiate based on your profile. Salary account holders with strong credit can get lower markups (0.3%–0.4%).
That is: "index 1.5% + markup 0.3% = 1.8%" vs "+ markup 0.6% = 2.1%" — the long-term gap is large.
2. More than one index exists
Banks use different indices:
- Chunghwa Post 1-year floating deposit rate (most common)
- Bank of Taiwan 1-year fixed deposit rate
- Bank's own "benchmark rate"
Different indices, different adjustment cadences. Ask during application.
3. Is refinancing worth it
If 1–2 years in you find another bank with a noticeably lower rate (0.3%+ lower), consider refinancing.
- Refinancing costs: scrivener fees, registration fees, early repayment penalty (if still within the lock-up period)
- Typical refinancing cost: NT$10K–30K
- Long-term interest savings usually exceed the cost
But the hassle (re-registering the mortgage, running between banks) keeps many people from doing it.
Best strategy for most
- At application, compare 3–5 banks (state-owned + 2 private)
- Negotiate the lowest markup
- Pick hybrid or pure floating (former for early stability, latter for long-term flexibility)
- Review every 2–3 years; refinance if a clear advantage opens up
Relationship to the Peace-of-Mind Loan
The First-Home Peace-of-Mind Loan is itself a floating-rate structure: years 1–2 locked at -0.5% (effectively fixed), then floating. See the full Peace-of-Mind 2.0 breakdown.
Tools
Use the Mortgage Calculator to plug in different rate scenarios (e.g., 1.8% vs 2.1% vs 2.5%) and see total interest differences — this helps you gauge your sensitivity to rate movement.
Official sources
- Central Bank (中央銀行) — benchmark rate, central bank rate policy announcements
- Chunghwa Post (中華郵政) — Chunghwa Post deposit rates (index for most mortgages)
- Financial Supervisory Commission (金融監督管理委員會) — banking supervision
Disclaimer
This is a general explanation of rate structure, not a rate forecast or investment advice. Actual applications are subject to each bank's approval terms.