State-run provident fund, the Pag-IBIG Fund, has increased its budget for housing loans, slashed interest rates and increased the amount members could borrow.
In a statement, Vice president and housing czar Noli de Castro announced that Home Development Mutual Fund (Pag-IBIG Fund) has created additional housing loan brackets with corresponding lower interest rates.
De Castro, who is also Pag-IBIG chair, said the new housing loan interest rate structure slashed the 10.5 percent rate for loans over P750,000 to P1.25 million . It has been reduced to only 8.5 percent for loans worth over P750,001 to P1 million, and to 9.5 percent for over P1 million to P1.25 million.
However, the 6 percent rate for loans up to P400,000 and 7 percent for loans over P400,000 up to P750,000 was retained.
The Pag-Ibig board also approved the increase in the maximum loanable amount to P3 million, at an interest rate of 11.5 percent per annum for loans starting at over P2 million.
The new rates took effect yesterday.
In 2007, Pag-IBIG has reduced the interest rates for loans over P300,000 to P750,000 from 10.5 percent to 7 percent. Earlier this year, the socialized housing bracket was expanded to cover loans of up to P400,000.
Members who avail of a P1 million housing loan save 15.94 percent per month with amortizations of only P7,689.13 (covering principal and interest) over a 30 year period, compared to P9,147.39 under the 10.5 percent old rate.
The state-run firm has also increased its total budget for its housing loan programs. It allocated P84.5 billion for this year from P71 billion last year to cater to the strong demand for low-cost housing.
Of the total amount earmarked for this year, Pag-IBIG Fund allocated P43 billion for housing loans, P7.5 billion for developers’ financing and P34 billion for members’ multipurpose loans.
Jaime Fabiaña, Pag-IBIG Fund chief executive officer, said the demand for loans has been increasing both from middle-income earners and real estate developers despite the global financial crisis.
“I don’t think that it’s [global financial crisis] a big issue. More of the real-estate developers are shifting to low-cost housing “ he told reporters.
Pag-IBIG Fund has two million members who are mostly middle income workers. Of the total membership, overseas Filipino workers account for only 300,000.