Sticky Philippine loan rates blunt impact of central bank cuts

The Philippine central bank has slashed its key policy rate by almost two percentage points to 4.75% since last year, but the price of a home loan from the nation’s top banks has barely budged.

BDO Unibank Inc. charges a 6% fixed rate on new housing loans for the first year, with the debt then subject to repricing, or else 6.5% fixed for five years. That’s roughly the same as the minimum offered in 2024, and rates at Bank of the Philippine Islands and Metropolitan Bank & Trust Co. show a similar trend.

Examples of home loan rates November 2025

Across Asia, as policymakers have reduced benchmark rates to support economic growth in the face of US tariffs, there’s evidence that banks aren’t fully passing on the cuts to consumers, according to Australia and New Zealand Banking Group. In the Philippines’ case, the stickiness of borrowing costs may prolong a slump that’s left its economy trailing Indonesia and China in growth.

Philippine commercial banks’ average lending rate, after dipping earlier in the year, hit 8.132% in August, up from 8.097% at the end of last year, Bangko Sentral ng Pilipinas data show. That’s as the benchmark has been cut 175 basis points since August last year.

For Philippine lenders, there’s little incentive to cut interest rates when a scandal over government graft has rocked confidence, threatening more bad loans. Demand is also weak: growth in household consumption, which accounts for more than 70% of the nation’s output, hit a four-year low in the three months through September as consumers held off spending.

“There’s this corruption scandal. Liken it to a toothache – the rest of the body feels it because everything is connected,” said Jonathan Ravelas, managing director at eManagement for Business and Marketing Services, a Manila-based consultancy. “Banks are cautious because of the economic outlook. It challenges jobs.”

“Banks are exercising prudent credit underwriting, particularly in consumer segments, to mitigate non-performing loan risks,” the Bangko Sentral ng Pilipinas said in response to questions.

It noted that a survey of bank loan officers showed most expect tighter lending standards for households in the current quarter, “citing a deterioration in portfolio profitability, a less favorable economic outlook, reduced risk tolerance, and weakening borrower profile.”

To be sure, total loans are still gaining, rising 10.5% in September from a year earlier, down from 12.2% at end-2024. And banks have eased up in some ways, with mortgage incentives including lower downpayments; waivers of application, registration and appraisal fees; or free insurance for the first year.

“We’re cautiously optimistic about where lending rates are headed. In the near term, we expect them to hold steady or dip slightly,” said Maria Cristina Go, head of consumer banking at BPI, one of the biggest in the country. “This will depend not only on the policy rates that will impact funding costs but will also consider inflation trends and asset quality.”

BDO Unibank said it expects lending rates for this year and the next two years to be “generally in the same range given current economic conditions.” And BSP data shows the rate at which banks lend to each other is declining.

The BSP says data shows lending rates “generally moved in line” with policy rate cuts, though the range and degree differed across loan types. It added that not all lenders engage in rate competition.

“I’m actually in the camp transmission is getting better,” said Euben Paracuelles, chief ASEAN economist at Nomura Holdings Inc. “It’s certainly not the lowest in the region and I would say compared to past cutting cycles, policy transmission of BSP’s latest rate cuts is improving.”

In the meantime, banks and consumers are cautious amid worsening political uncertainty. In July, President Ferdinand Marcos Jr. unveiled a major campaign against corruption, especially in flood control projects. Massive protests erupted in anger at the scale of the graft, and the government slowed public works spending to allow more scrutiny, with stocks sliding to a three-year low.

Sentiment had already been hit by a year of fierce feuding between Marcos and Vice President Sara Duterte.

The Philippines isn’t alone in seeing banks refrain from rate cuts. Bank Indonesia’s governor last month criticized banks for only cutting lending rates by 15 basis points, even as the benchmark has been reduced by ten times that. In other countries such as Malaysia, however, lending rates are required to be calibrated with policy rates. In Communist Vietnam, the government is driving state-owned lenders to extend credit as it pushes to achieve economic growth to 10% a year.

“Household credit demand has responded uncharacteristically weakly to the recent monetary policy easing cycle in Asia,” ANZ analysts led by Sanjay Mathur and Dhiraj Nim wrote in a Nov. 6 report.

Source: Business World

UK House prices beat forecasts before budget

House prices rose more than expected last month in a further sign of resilient demand despite the possibility of property-related tax reforms in the budget. Average prices rose 0.3 per cent in October after rising by 0.5 per cent in September, mortgage lender Nationwide’s latest house price index showed.

Year-on-year prices were 2.4 per cent higher, up from a 2.2 per cent annual increase in September.

Economists had forecast no change over the month and a 2.3 per cent increase over the year.

Robert Gardner, Nationwide’s chief Martin Strydom economist, said: “Against a backdrop of subdued consumer confidence and signs of weakening in the labor market, this performance indicates resilience, especially since mortgage rates are more than double the level they were before Covid struck and house prices are close to all-time highs.

”The figures come after Bank of England data on Wednesday showed that the number of mortgages approved by lenders in September came in higher than expected. Mortgage approvals totalled65,944 during the month, the highest figure since December and above economists’ forecasts of 64,000.

The data are at odds with other measures of the housing market which have suggested a slowing in price growth in recent months, attributed to caution among homebuyers before the budget on November 26.

A report by the Royal Institution of Chartered Surveyors published in October quoted Timothy Shaw, of Vincent Shaw estate agents in Cambridge as saying that the housing market was in a “state of semi-paralysis”, with agencies reporting another fall in inquiries, sales, new instructions and prices in September.

It said the autumn slowdown, brought on by speculation about potential reforms to property taxes, has “become more firmly entrenched of late” .Rachel Reeves, the chancellor, has said that “higher taxes on the wealthy …will be part of the story” in the budget, with some form of property tax seen as a possibility.

Ashley Webb, UK economist at Capital Economics, said that data suggested that “homebuyers may not be as fazed by the threat of tax rises in the budget on November 26, potentially on property, as it first appeared”.

Elliott Jordan-Doak, a senior UK economist at Pantheon Macroeconomics, said that while house prices had remained subdued, they were likely to continue rising slowly over the coming months.“ Some homebuyers are taking await-and-see approach to the budget, which is weighing slightly on sentiment in the market.

“But the activity indicators holding up better than their survey-based signals suggests to us that demand remains robust,” he said. Nationwide said housing affordability was likely to improve modestly if income growth continues to outpace house price growth. It also expects borrowing costs to ease, bolstering buyer demand.

Goldman Sachs said this week that after a sharp deterioration in economic data, it expected the Bank of England to cut interest rates by a quarter point to3.75 per cent next week.

Source: The Times

Collaborative efforts to solve the Philippines’ housing crisis

Millions of people around the world live their lives in search of a place they can call home. After all, access to adequate shelter remains a challenge, particularly in areas affected by natural disasters, conflict, or rapid urban growth.

Homelessness charity Depaul International estimates 4.5 million people are experiencing homelessness in the Philippines, and about two-thirds of this number are in Metro Manila.

To combat this, both government initiatives and the efforts of private organizations and nongovernment organizations are addressing the housing crisis, which often becomes magnified during times of peril and uncertainty.

The main housing program of the administration of President Ferdinand R. Marcos, Jr. is the Pambansang Pabahay Para sa Pilipino (4PH) Program, which aims to build 6.5 million housing units through government-led housing initiatives and address the country’s current housing backlog by building one million housing units yearly until 2028.

Established under Executive Order No. 34, s. 2023, the government’s flagship program was conceptualized to address the country’s current housing needs and features an innovative framework that has eased the burden brought by two major bottlenecks in the housing sector: affordability and access to funds.

Headed by the Department of Human Settlements and Urban Development (DHSUD), the latest news on the project includes the launch of a website dedicated solely to the endeavor, offering information and services related to the government’s flagship program. Additionally, it has been reported that a total of 42 private developers have committed to deliver 251,846 socialized housing units under the administration.

In the same way, the National Grid Corporation of the Philippines (NGCP) has also helped the cause in recent years. Together with Gawad Kalinga, the NGCP turned over a housing project in 2020 to the City Government of Valenzuela, which cost over P82 million, and comprised of 22 three-storey low-rise buildings with 792 units.

As the power grid operator, the NGCP worked with the City of Valenzuela to relocate residents previously living within the transmission right-of-way corridor to prevent any accidents from happening due to their proximity to the high-voltage power lines. The housing project is located in Disiplina Village, Lingunan, Valenzuela City, and is a joint in-city housing project for informal settler families.

Several developers have also given back to communities through their corporate social responsibility. Among the big names providing housing assistance is the real estate arm of the Lucio Tan Group, Eton Properties, which has provided safe, dignified housing for underserved communities in Nueva Vizcaya, in partnership with the Tan Yan Kee Foundation.

Named the Eton Bahay Liwanag Project, the developer recently turned over four newly built homes in the area to carefully selected families based on their circumstances and resilience despite difficult living conditions in the hinterlands of Nueva Vizcaya.

Launched in 2019, the Eton Bahay Liwanag Project has completed 12 homes in the province to date.

Similarly, DMCI Homes has been actively supporting social housing initiatives in partnership with Habitat for Humanity Philippines and local governments through its Kaakbay sa Pamayanan program.

The company’s efforts include a P4-million donation to help construct homes for poor families and teachers in the Bistekville I project in Quezon City, as well as sponsorship of 92 homes at a relocation site for informal settlers in Parañaque. Volunteers from DMCI Homes also contribute directly by painting and maintaining these houses, helping to provide safe, affordable shelter for disadvantaged communities.

Nongovernment organizations (NGOs) have also done their part in building homes for Filipinos. For example, Habitat for Humanity Philippines brings people together to build homes, communities, and hope, “seeking to put God’s love into action.”

In 2019, Habitat for Humanity joined forces with the Hilti Foundation to expand the use of disaster-resilient Cement Bamboo Frame Technology and help close the housing gap in Negros Occidental. Named the Negros Occidental Impact 2025 (NOI25), the initiative seeks to create sustainable communities where homes are safe, green, resilient to disasters, and supportive of families’ long-term security and well-being. Six years later, the NGO has built over 400 disaster-resilient homes and helped families live in sustainable communities.

Likewise, the Manny Pacquiao Foundation, named and founded on behalf of boxing legend Manny D. Pacquiao, has programs aimed at creating lasting change for communities and inspiring people to make a tangible difference in the world. Among the group’s programs is a housing project that has already constructed 300 homes in three locations for hundreds of families in need.

Addressing the housing crisis in the Philippines requires the combined efforts of government programs, private developers, and NGOs working to provide safe, affordable, and resilient homes. Through these partnerships, more families can gain the shelter that they need to thrive.

Source: Business World