MANILA, Philippines--THE STATE-CONTROLLED Home Development Mutual Fund, popularly know as the Pag-IBIG Fund, has earmarked a record P30 billion for new low-cost housing loans this year to meet an expected boom in demand due to a low-interest-rate regime.
In an interview Saturday, Pag-IBIG president Romero Quimbo said in 2007, the housing provident fund allotted P21 billion for housing loans but ended up lending an all-time high of P23.5 billion, up by 42.5 percent from the new loans released the previous ago.
“And these are retail loans—with an average (size) of P475,000 per borrower—not the big developers. The market that we’re serving is less than middle income. We’re really reaching the C bracket of the population,” Quimbo said.
“We approximate that this year, it won’t be too far from that,” Quimbo said, noting that demand was being driven by affordable and below-market interest rates charged by Pag-IBIG as well as a more efficient processing of loan application.
Based on the amount of new loans budgeted for this year, Pag-IBIG is targeting a loan growth of at least 28 percent.
“The lower interest rates make housing loans more accessible, but it’s also partly due to a great marketing effort to propagate the program. A program will not be good without takers and a streamlining of the process was made,” he said.
The P30-billion housing loan budget for 2008 was announced by Vice President Noli de Castro during a recent Development Bank of the Philippines-organized Hong Kong roadshow for overseas Filipino workers.
De Castro, who also chairs the Housing and Urban Development Coordinating Council, said it was the best time to borrow now that local interest rates had gone down, noting that the Pag-IBIG Fund can provide financing for low-cost housing units at an interest rate of 6-7 percent—from about 12 percent a few years ago—for a term of up to 30 years.
“At 7 percent (a year) for a P750,000 housing unit, we computed the amortization at P4,000-P5,000 a month as opposed to renting a house which can cost you as much as P10,000 (a month),” De Castro said.
A special window for OFWs has recently been created to help the sector acquire affordable homes, the Vice President said.
As Pag-IBIG does not want the strong peso to lead to loan delinquency, Quimbo explained that the housing provident fund was now more aggressively targeting OFWs who are being paid in currencies that are gaining against the dollar such as the euro.
But a major challenge for Pag-IBIG this year would be to raise more funds to meet the booming demand for low-cost housing.
“This year, we have enough funds but if it increases by more than 40 percent, we should be able to borrow at a lower coupon rate because we are relending for the long term. It depends on how well the Bureau of the Treasury will be able to manage the interest rate environment,” he said.
PagIBIG plans to issue P5-P8 billion worth of bonds in the middle of the year to boost its funding resources.
[ Published by : inquirer.net ] February 5, 2008
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