Resumen
This paper documents asymmetries in the spread between mortgages loan rate and central bank discount rates also known as the . mortgage loan premium in Taiwan... Empirical results revealed that the mortgage loan premium adjusts to the threshold faster when the central bank discount rate increases relative to the mortgage loan rates than to the state /situation when the discount rate moves in the opposite direction. The empirical findings indicate that despite recent deregulations in the banking sector; Taiwanese commercial banks still exhibit predatory rate setting behavior. The empirical results also revealed bidirectional Granger causality between the mortgage loan rate and the discount rate, indicating that the mortgage loan rate and the discount rate affect each other?s movements. These empirical results suggest that Taiwanese monetary authority can use its countercyclical monetary policy instrument to achieve macroeconomics objectives in the short run. However, the findings also suggest that, to be effective, the monetary policy makers should intervene in the housing mortgage market more frequently with many small changes in the discount rate to minimize the variance of the mortgage premium. Key Words: Asymmetry; mortgage loan rate; central bank discount rate; mortgage loan premium; Taiwanese; predatory pricing behavior.