Lending rates in Philippine banks for the commercial real estate and housing sectors remained unchanged in Q4 2015, reflecting stability in the property industry.
Citing a recent survey conducted by the Bangko Sentral ng Pilipinas (BSP), the Philippine Star reported that overall credit standards of 20 respondent banks kept their rates in the last quarter of 2015.
According to Ruby Anne Lemence, bank officer at BSP’s Department of Economic Research, this meant that there was a tolerance for risk and a more stable economic outlook.
In addition, the profiles of real estate borrowers in the Philippines remained unchanged, allowing banks to stick to existing loan provisions, but with firm collateral requirements, wider loan margins, increased use of interest floors.
The last 13 quarters saw banks tighten lending standards in the commercial and housing sectors to avoid potential losses.
“The net easing of credit standards for housing loans was attributed by respondent banks to their increased tolerance for risk and the improvement in the overall profile of borrowers,” the BSP told local media.
The central bank also said that there were “no riskes from the real estate market yet” following a stress test in early January, Rappler.com reported.
It has been noted by BSP that local real estate developers became more “prudent” with their expansion plans and loan strategies after witnessing the Asian financial crisis in the late 1990s.