Standards In Commercial Housing Loans To Increase In The Following Months

In a survey done by the Banko Sentral ng Pilipinas (BSP), the continued tightening of the credit standards for real estate loans to corporation by local banks was shown.

The BSP’s Senior Bank Loan Officers’ Survey (SLOS) for December 2017 showed a net tightening of the overall lending standards for commercial real estate loans. This is based on the loans done in October to December using the diffusion index approach.

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Also based on the same survey, Inquirer reports that survey shows that this is the eighth quarter wherein the banks have tightened their standards.

“The tighter overall credit standards for commercial real estate loans reflected respondent banks’ wider loan margins, reduced credit line sizes, stricter collateral requirements and loan covenants, shorter loan maturities, an increase in use of interest rate floors,”

The BSP also said the over the next quarters of 2018, the banks are expected to continue their net tightening in their credit standards.
The increase in standards is brought upon by the higher investments in plants, equipment, improvement in the outlook of borrowers’ firms.

Also according to the BSP, the banks are expecting more increase in demand in the following quarters.

On the other hand, despite the increase in standard of commercial loans, household and personal ones remain unchanged in the last three months of 2017.

“The unchanged credit standards for housing loans was attributed by respondent banks largely to unchanged profile of household borrowers, their stable economic outlook as well as unchanged tolerance for risk for the said type of loan,”

The banks also foresee that these will remain unchanged in the next quarters.

“At the same time, results continued to show increased demand for housing loans in the fourth quarter of 2017 as well as expectations of a sustained increase in demand for the said type of loan in the next quarter,”

In order to have an important indicator of the strength of credit activity in the country, the BSP started the SLOS in 2009.

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