Real estate loans rise 19.8%

THE Bangko Sentral ng Pilipinas (BSP) has registered a 19.8-percent jump in real estate loans in the first half of 2016.

The central bank said universal and commercial banks have released P1.138 trillion of total credits for housing and commercial property in the first six months of this year, higher than the P949.88 billion credit recorded in the same period last year.

Seventy-five percent of the total property loans or P443.08 billion came from developers and construction firms, while the rest were lent to other commercial borrowers.

Of the amount borrowed by construction companies and property developers, P198 billion was for residential units.

Banks had also expressed their approval for P279 billion in loans for residential projects, of which P65 billion was intended for low-cost and socialized housing projects.

The BSP data show property loans accounted for 19.2 percent of banks’ total loan portfolio. The central bank has set a limit of 20 percent of banks’ total loan portolio to real property lending.

Based on the central bank’s first residential real estate property index (RREPI), it maintained that there is no real estate bubble in the Philippine property sector.

The BSP said real estate prices exhibited a 9.2 percent overall rise year-on-year in the first quarter of 2016. The central bank compiled the RREPI through its surveys on 93 banks and the housing loans they have approved from January to March this year.

A bubble happens when developers build more homes and structures than what is needed and this bursts when the demand drops, leading to an oversupply, causing prices to plunge.

Meanwhile, Standard & Poor’s (S&P) remains optimistic on Philippine banks’ operations amid negative external economic developments, citing that domestic financial instutitons remain driven by domestic deposits.

In a report, the credit rater, which recently affirmed its BBB investment rating with stable outlook on the country, said the Philippines faces fewer risks from international debt because the banking sector “has a very low reliance on external savings.”

BSP data shows that as of June this year, the banking system’s deposit liabilities amount to about P9.65 trilllion, higher than the previous quarter’s P9.41 trillion. With PNA
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