The exposure of lenders to real estate decreases from the end of September.
LOCAL BANKS and fiduciary entities saw their exposure to the real estate sector decrease at the end of the third quarter of 2021, according to data from Bangko Sentral ng Pilipinas (BSP).
Banks and fiduciary services have a cumulative exposure of 22.18% to the real estate market at the end of September, well below the limit of 25% set by the central bank. It fell slightly from the record exposure of 22.2% observed at the end of June.
“I think [this level of exposure] is not of great concern as we are still grappling with the pandemic and it is only in the fourth quarter that much of the demand [in the sector] is back, ”UnionBank of the Philippines, Inc. Chief Economist Ruben Carlo O. Asuncion said in a Viber message.
“The Omicron threat could again dampen aggregate demand and could potentiallyffect demand for real estate at least in the short term, ”he added, referring to the more transmissible variant of the 2019 coronavirus disease (COVID-19) which is leading to a new wave of infections.
Broken down, the real estate exposure of Philippine banks stood at 22.24% at the end of September. from 22.21% at the end of June.
At the same time, the exposure of fiduciary services to the real estate sector plunged to 14.69% at the end of September against 21.16% at the end of June.
BSP data showed that loans and investments in the real estate sector reached 2.76 billion pesos at the end of September, an increase of 8.3% from the 2.548 billion pesos observed during the same period. period of 2020.
Loans to the real estate sector reached 2.367 billion pesos, up 6.9% from 2.214 billion pesos a year ago. Broken down, the banks disbursed loans worth 2.356 billion pesos, while the fiduciary department granted loans amounting to 11.5 billion pesos.
Gross non-performing home loans reached 122.812 billion pesos, up 32% from 92.991 billion pesos at the end of September 2020. This brought the ratio to 5.19%, from 5.15% at the end of September 2020. second trimester as well. like 4.2% a year ago.
Meanwhile, delinquent home loans stood at 152.186 billion pesos at the end of September, up 6.11% from 143.411 billion pesos a year earlier. These loans represented 6.43% of credit to the sector, up slightly from 6.41% in June but lower than the 6.48% observed at the end of September 2020.
Real estate investments in debt and securities amounted to 394.476 billion pesos at the end of September, up 18% from 334.256 billion pesos a year earlier. Investments by banks amounted to 104.969 billion pesos, while 289.506 billion pesos came from fiduciary departments.
The BSP monitors the exposure of lenders to the real estate sector as part of its mandate to guide Fifinancial stability.
As part of its relief measures during the pandemic, in August 2020 the central bank raised the limit on banks’ mortgage loans to 25% of their total loan portfolio, from 20% previously. This decision was taken to free up liquidity for the sector during the crisis.
Home prices in the third quarter of 2021 rose 7.3% year on year, ending two consecutive quarters of annual declines, based on data released by the BSP last month. The rise in prices was attributed to increased demand for condominiums and townhouses. – Luz Wendy T. Noble