Pag-IBIG Fund says home loan rates to stay unchanged despite BSP rate hikes

Metro Manila (CNN Philippines, March 28) — The Pag-IBIG Fund said its interest rates for home loans it grants members will stay unchanged despite rising borrowing costs as the central bank is nowhere near unwinding its tight monetary cycle.

Pag-IBIG Vice President Karin Lei Franco Garcia said on Tuesday the fund is keeping housing mortgage rates at 5.75% fixed for one year, as well as interest rates for loans with longer maturity.

"We are maintaining our interest rate as of now. The lowest is 5.75% for our regular housing loan. And in fact, for our affordable housing loan for minimum wage earners, it remains at 3%. That is fixed for 10 years," said Garcia.

It stayed that way even as the Bangko Sentral ng Pilipinas began raising its key policy rates early last year to contain red-hot inflation.

The BSP's overnight borrowing rate is now at 6.25%, the highest since November 2008 after successive rate hikes from just 2% at the start of 2022.

Asked if the BSP contemplates reversing its tight monetary policy stance when inflation shows clear signs of easing, BSP Governor Felipe Medalla last week said, "The very likely scenario is we will not cross 4% until, as I said November or December this year so therefore any reversal of the tightening will probably have to happen after that."

But at a fixed rate of 5.75%, Pag-IBIG's lending rate remains below market level, making it a more attractive option for home buyers.

The agency booked over ₱100 billion in home loans to at least 100,000 members in 2022, a record high, Garcia said.

Under its charter, 70% of Pag-IBIG's investable funds must be placed in home loans. The rest are being managed by a portfolio manager. It recently hired BPI's asset management arm to do that job.