The non-performing ratio on mortgages at Taiwan's banks has risen to its highest level in five years. The Financial Supervisory Commission said it would call in one large private bank where the increase has been pronounced, to examine loan screening and post-disbursement management.

Accumulated interest burden is cited as the driver. Rate increases over recent years have raised monthly payments for floating-rate borrowers, with the heaviest pressure on those who borrowed with small down payments when house prices were high.

The absolute level remains low. Taiwan's mortgage delinquency ratio is low by international standards, and regulators acknowledge that the rise is measured from a very low base.

What the commission is watching is the spread between banks. Where one lender's delinquencies grow faster than the average, the cause may lie in underwriting standards or in concentration on particular regions or property types.

Taiwanese authorities have introduced successive caps on aggregate property lending and restrictions on borrowing by multiple-property owners. Growth in new lending has slowed, but the repayment burden on loans already made is a separate matter.

Regulators are expected to urge banks to increase loan-loss provisions and to adjust repayment terms for vulnerable borrowers. Specific measures will follow the review.