Friday, 22 January 2010 00:00 [ manilatimes.net ]
BY MARICEL E. BURGONIO Reporter
IT’S difficult to find another time in the past or in the coming years when you have low bank rates for housing loans, says Rolando Rodriguez, Philippine Savings Bank executive vice president.
This explains the recent interest in housing among Filipinos, according to him.
Partly responsible for this is the Bangko Sentral ng Pilipinas’ (BSP) decision to keep its policy rates at record lows of 4 percent and 6 percent for the overnight borrowing and lending windows since August last year.
As a result, banks have passed on to their clients a combined 210 basis points cut in their lending rates, or higher than the 200 basis points reduction in the BSP’s overnight credit facilities.
Housing loans extended by thrift institutions, which traditionally cater to the individual borrowers or the so-called retail segment, had risen by 9 percent at end-September 2009 from the previous year, and by 3 percent from end-June 2009.
The bulk of the thrift industry’s real estate loans were hogged by residential borrowers at P91 billion in September, up from P81 billion in the same month of 2008 and from P86 billion in June 2009.
Indeed, banks have been falling over themselves to offer single-digit loan rates for condominium, townhouse, and house and lot purchases in Metro Manila and surrounding areas.
For instance, PS Bank is offering consumers as low as 9.5 percent for a long-term loan.
Be it through a bank or Pag-IBIG, a homebuyer can make a downpayment of 20 percent for up to 2 years, and finance the balance for 25 years by paying single-digit interest.
Remittances sustain borrower, lender interest
Beyond low rates, interest in housing loans from both the demand and supply sides has been propped up by robust remittances of overseas Filipino workers (OFWs), many of whom account for the long cue for a bank application in the past months.
Victor Abola, University of Asia & Pacific economist, said the resilience of remittances provided support for housing demand in the second half, especially in the fourth quarter.
Banks are monitoring remittances as an indicator of future mortgage lending activity, as money sent home by OFWs has proven resilient despite the weak global economy.
At end-November 2009, remittances had grown by 5.1 percent to $15.8 billion, bucking earlier forecasts of a contraction.
The demand for low cost housing remains high, with consumer mostly looking for houses costing from P1 million to P3 million, which is within the price range of OFWs, among others.
In the case of PS Bank, Rodriguez said they have been monitoring the payment behavior of OFW families. ”We’re not apprehensive about that portfolio. The payment experience does not warrant any concern,” he said.
Among thrift lenders, the non-performing residential real estate loans inched up to 9 percent at end-September 2009, from 8.26 percent the year before and 7.8 percent at end-June 2009.
Floods cause change in buyer behavior
Contrary to expectations, the series of typhoons that struck the Philippine capital failed to dampen demand for housing—albeit buyer preference shifted to vertical projects.
Indeed, the 11.3-percent growth of remittances in November, or a month after typhoons Ondoy and Pepeng struck, was the fastest recorded in 2009, indicating OFWs accelerated their remittances to help relatives back home rebuild their lives.
Danilo Ignacio, Eton Properties president, said the trauma and economic loss endured by flood-stricken Filipinos only underscored the importance of home location and elevation in property selection.
“The demand from home buyers remains strong as evidenced by the continued strong sales of Eton properties. The only noticeable change in our buyers’ behavior after the Ondoy and Pepeng typhoons is the change in the first question they ask: Is your project flood-prone?” Ignacio said.
“There is much interest in condos now. We project continued demand as residents from affected areas seek new homes in elevated projects,” he added.
Rex Mendoza, Ayala Land Inc. (ALI) head of corporate sales, agreed that the interest rates for condo units had been rising since the fourth quarter of 2009 due to high demand for condos.
He said the second-half sales of the residential segment of the real estate industry would be more buoyant than in the first half.
Alfonso Salcedo Jr., BPI Family Savings Bank president, said their loan portfolio could have grown by 10 percent to 15 percent last year.
“The people had a wait-and-see attitude but the demand for loans is not stopping,” he said, adding that non-OFWs were also lining up for a loan.
Fundamentals for continued demand
Jaime Cura, Chamber of Real Estate and Builders Association Inc. (CREBA) president, point to the industry’s fundamentals for the continued demand.
“The demand for housing, particularly of the low-cost category, is expected to continue without let-up,” he said.
A high population growth rate upward of 2 percent and the huge housing backlog in the country are the key drivers of demand.
Government estimates the backlog at 3.7 million to 6 million houses for a population of 92 million.
The numerous financing options—from the government to private banks—also ensure a relatively stable source of credit for different levels of wage earners.
“A family can plan on finally signing up for a housing loan and be assured that there will be financing available. This level of confidence has also lent credibility to the massive marketing campaigns waged by developers and financing institutions among would-be buyers of a first or second house for the family,” Cura said.
Besides OFWs, the profile of homebuyers is diversifying to include the so-called yuppies who are employed in fast-moving technology companies as well as international finance firms, not to mention the moneyed individuals—both native as well as foreign—who have learned to invest their surplus capital in real estate.
The brisk sales of office and residential condominium units, even long before construction is complete, indicates active investment by primary buyers who, later, sell their units to secondary buyers at a reasonable profit, Cura said.
CREBA anticipates an upward trend in real estate development and sales this year.
It said the slowdown in high-end and upper-middle-income housing seen in late 2008 and throughout most of 2009 because of to anxieties caused by the global recession would steadily reverse.
