By Kathleen A. Martin (The Philippine
Star) | Updated April 28, 2014 - 12:00am
MACTAN, Cebu , Philippines – The Bangko Sentral ng Pilipinas said it
will not “hesitate” to deploy measures to prevent any asset price bubbles
forming in the property sector amid sustained growth in real estate credit.
Central bank Deputy Governor Diwa C. Guinigundo,
during the annual BSP Lecture Series, said the above 20-percent increase in
loans to real estate in the three years to 2013 bears “closer monitoring.”
“Today, while there is no evidence of
overstretching of asset prices as far as real estate sector is concerned, if
you will have over 20 percent, 30 percent, or 25-percent (credit) growth, it
also comes to a point when it becomes risky,” Guinigundo said.
The BSP official said that during the
height of the global financial crisis in 2008, real estate credit growth hit
30.2 percent, but this sharply fell to 12.3 percent in 2009 and 12.2 percent in
2010.
The figure climbed to 25.2 percent in
2011 and to 29.7 percent in 2012, before slightly easing to 22 percent last
year.
“If there is evidence that there are
signs (of asset price inflation) then the BSP will not hesitate and we will
undertake the necessary measures from the monetary policy side and the
prudential side,” Guinigundo said.
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Real estate loans amounted to P831.787
billion last year, up from the P676.928 billion recorded in 2012.
The increase was driven by a
24-percent expansion in commercial real estate borrowings to P511.337 billion
and a 21-percent climb to P320.45 billion in residential property loans,
central bank data showed.
The BSP, as part of its mandate to
ensure financial stability, monitors banks exposure to the real estate sector.
The real estate loans, however, only form a part of the exposure as this also
includes investments in real estate securities.
In August 2012, the central bank
tightened rules in monitoring banks’ exposure to the real estate sector to
ensure no asset bubbles arise in the sector.
The new expanded reporting system
include looking at loans to developers of socialized and low-cost housing, and
to individuals, and credit supported by non-risk collaterals or Home Guarantee
Corporation guarantee.
Moreover, banks are also required to
report investments in debt and equity securities that finance real estate
activities.
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