By Lawrence Agcaoili (The Philippine
Star) | Updated July 25, 2016 - 12:00am
MANILA, Philippines - Banks continued to
tighten lending standards for commercial real estate and housing loans in the
second quarter of amid the reduced tolerance for risk and perception of
stricter financial system regulations.
Dennis Lapid, deputy director at the
BSP’s Department of Economic Research, said the central bank’s second quarter
Senior Loan Officers Survey showed a net tightening of overall credit standards
for commercial real estate and housing loans.
“The diffusion index (DI) approach, however,
continued to indicate a net tightening of overall credit standards for the
second consecutive quarter,” he said.
In terms of specific credit standards,
Lapid said respondent banks showed wider loan margins, reduced credit line
sizes, stricter loan covenants, and increased use of interest rate floors.
In the diffusion index approach, a
positive index for credit standards indicates that the proportion of banks that
have tightened their credit standards is greater compared to those that eased.
Using the modal approach, Lapid pointed
out about 90.5 percent of the respondent banks indicated unchanged credit
standards for commercial real estate loans in the first quarter.
In the modal approach, the results of
the survey are analyzed by looking at the option with the highest share of
responses.
Lapid said the demand for commercial
real estate loans was also unchanged in the second quarter based on the modal
approach.
However, he revealed a number of banks
indicated increased demand for the said type of loan on the back of increased
working capital and inventory financing needs of borrowers, clients’ improved
economic outlook, and more attractive financing terms offered by banks.
Over the next quarter, although most of
the respondent banks anticipate generally steady loan demand, a number of banks
expect demand for commercial real estate loans to increase further.
The results of the first residential
real estate price index (RREPI) released last June showed the country’s
property sector remained vibrant in the first quarter.
The RREPI increased by 9.2 percent in
the first quarter from 5.1 percent in the fourth quarter of last year.
“This represents a vibrant housing
industry in the Philippines and the robustness of this conclusion is confirmed
by the trends in consumer prices as well as the recent result of the Consumer
Expectation Survey,” BSP Deputy Governor Diwa Guinigundo earlier said.
_______________________________________________________________
