BSP sees higher demand for housing loans

Attractive financing terms and rising consumption are expected to boost household demand for housing loans in the first three months of the year, according to the results of a Bangko Sentral ng Pilipinas (BSP) survey.

Results of the fourth quarter 2023 Senior Bank Loan Officers’ Survey (SLOS) reflect an increase in the demand for housing loans in the last quarter of 2023, a trend that is expected to continue in the first three months of this year.

“The higher residential real estate loan demand in the current quarter and the next quarter is due to rising household consumption and housing investment, as well as banks’ attractive financing terms,” BSP said.

For the first quarter of 2024, about half of the bank respondents or 50 percent expect higher demand for credit from households using the modal approach.

However, this is lower than the 56.3 percent indicated generally steady loan demand from consumers in the last quarter of 2023 based on the modal approach.

In the modal approach, BSP said the survey results are analyzed by looking at the option with the highest share of responses.

“The three options for the modal approach are either tightening, easing, or unchanged credit standards for loans to enterprises and for loans to households,” BSP added.

Among commercial enterprises, the SLOS results showed that a higher proportion of respondents at 82.9 percent maintained overall credit standards for commercial real estate loans (CRELs).

However, BSP said the results from the diffusion index (DI) method pointed to a net tightening of credit standards for CRELs due to deterioration in borrowers’ profiles and banks’ reduced tolerance for risk.

“In the next quarter, a larger number of participating banks anticipate to keep their loan standards for CRELs unchanged based on the modal approach, while the DI-based results show expectations of net tightening credit standards for CRELs,” BSP said.

In the DI approach, BSP said, a positive DI for credit standards indicates that the proportion of respondent banks that have tightened their credit standards exceeds those that eased (“net tightening”), whereas a negative DI for credit standards indicates that more respondent banks have eased their credit standards compared to those that tightened (net easing).

BSP said the unchanged credit standards in the DI approach indicate that the proportion of the respondent banks that have tightened their credit standards is equal to those that eased their credit standards.