Jul 20, 2015

Is It True That The Maximum Loanable Amount For New Housing Loans Is Just 60% of the Appraised Value?

In October 2014, I read in the news that the Bangko Sentral ng Pilipinas (BSP) will set a cap on real estate loans at sixty percent (60%) of their collateral values. I did not write about it then as I was not able to research yet on the actual BSP document. I thought of the repercussions of this policy, if true – necessarily, for a person to get a loan, he/she needs to be ready with forty percent (40%) equity (also known as downpayment). Thus, for a person to be able to purchase a P1 million property, he/she needs to have P400,000.00 ready in cash. How many people will NOT be able to purchase a property because of this policy? A lot.

Is the cap for housing loans really 60%?

The Monetary Board approved on October 29, 2014, BSP Circular No. 855 Series of 2014. It embodies the Guidelines on Sound Credit Risk Management Practices. The Media Release on the said circular, which is a little bit easier to understand, can be found here.
Source: click here

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