Philippine Bank Mortgages Grow Faster in First Half

Philippine bank mortgages grow faster in first half

Mortgages in the Philippines posted a double-digit growth in the first half of 2023, as the economy gradually recovers from the COVID-19 pandemic. Outstanding mortgage loans from universal and commercial banks grew by 14.7% year-on-year to P1.59 trillion during that period.

This growth was driven by a sustained demand for housing units from Filipino expats and individuals investing in real estate. The Overseas Filipino Bank (OFBank) reported its mortgage loans to overseas Filipinos grew by more than 50% in the first half of 2023, while the Bank of the Philippine Islands (BPI) said that its mortgage loan approvals climbed by 25%

Banks offer lower mortgage rates

Banks have been offering lower mortgage rates in response to the central bank’s aggressive rate cuts. The average mortgage rate in the Philippines fell to 5.88% in June 2023, from 6.25% in December 2022.

The lower interest rates have made it more affordable for Filipinos to buy homes. BSP Governor Benjamin Diokno said that the low interest rates are expected to continue in the second half of the year, which will further boost the demand for mortgages.

More Filipinos buying homes

The growing demand for mortgages is a sign that more Filipinos are buying homes. This is supported by the recent data from the Philippine Statistics Authority (PSA), which shows that the value of residential construction permits approved by local government units climbed by 18.3% in the first six months of 2023.

The PSA also reported that the number of home construction permits issued by the government rose by 20.2% during that period, indicating that more Filipinos are building their own houses.

What's next for Philippine bank mortgages?

The outlook for Philippine bank mortgages remains positive in the second half of 2023. The economy is expected to continue growing, which will lead to a sustained demand for housing units.

Banks are also expected to continue offering low mortgage rates, which will make it more affordable for Filipinos to buy homes. This will further boost the demand for mortgages and support the growth of the Philippine real estate sector.