Pag-IBIG Fund retains lowest home loan rates

MANILA, Philippines — Pag-IBIG Fund has retained the record low interest rates under its home loan program as it posted double-digit growth in loan payments and members’ savings collections,  allowing the agency to address the growing demand for its home loans.

In a statement, the agency said it maintained its subsidized rate of three percent per annum under its Affordable Housing Program offered to members earning not more than P15,000 a month for those within the National Capital Region (NCR), or those earning not more than P12,000 a month for those outside NCR.

The rate for this loan program is the lowest in the market and has been in place since May 2017.

The Fund also maintained its interest rates for loans up to P6 million under its Regular Housing Loan Program, where members may secure loans at a rate of as low as 5.375 percent per annum. 

The agency assured its members that the rates shall be maintained for at least the remainder of the year.  Pag-IBIG Fund uses the full risk-based pricing framework in setting the interest rates for its home loans.

“We are keenly aware of the need to provide affordable housing, especially to low-wage earners. Because of the Fund’s strong financial standing, we assure our members that we can maintain our low interest rates for the rest of 2019 as we continue to heed President Duterte’s call to address the housing needs of Filipino workers,” said Eduardo D. del Rosario, chairperson of the Housing and Urban Development Coordinating Council (HUDCC) and Pag-IBIG Fund Board of Trustees.

Del Rosario explained that the Fund is able to keep its lending rates low because it is able to sustain its collection efficiency. He said that home loan payments in the first half of 2019 amounted to P30.44 billion, which is 12 percent higher than the P27.22 billion collected in the same period last year.

“We are happy to report that our efforts to maintain efficiency of collections enabled us to keep our performing loans ratio or PLR at above 90 percent. This ratio is high considering that many of our borrowers are minimum-wage earners and are usually unserved by most lending institutions because of their financial situation,” Del Rosario said.

Pag-IBIG Fund CEO Acmad Rizaldy Moti added that the high increase in the collection of members’ savings helped keep the agency’s lending rates low. In the first half of the year, collection of members’ savings improved 27 percent year-on-year to P23.40 billion, which is the highest amount saved by members for any January to June period.

“We see no reason so far to increase our home loan rates because the continuing improvements in our collection efficiency boost our PLR.  Member savings collections have also grown 27 percent while housing loan payment collections increased 12 percent. All these mean that we are able to effectively fund the high demand for our home loans without the need to borrow from the market. The strong inflow of funds and our ability to maintain quality loan portfolios directly benefit our members because we can continue to offer them the lowest lending rates possible and still declare above-market dividend payouts. That we have been offering these low home loan rates since 2017 is a testament to the Fund’s stability and sound financial management,” Moti said.