The Home Development Mutual Fund or Pag-IBIG has dropped 100 basis points off its housing loan rate to 5.5 percent a year, the company reported on Wednesday.
“Starting July 1, eligible borrowers can opt for 5.5 percent per annum interest rate for the first year of the loan term for housing loans up to P6 Million,” Pag-IBIG President and CEO Darlene Berberabe said in a statement.
This is the lowest rate the fund is offering under its End-User Financing (EUF) Program.
Previously, the fund offered a three-year minimum fixed period for an EUF loan at 6.5 percent.
“Pag-IBIG Fund’s End-User Financing Program will come with rates of 5.500 percent for a 1-year fixed-pricing period, 6.500 percent for 3 years, 7.270 percent for 5 years, 8.035 percent for 10 years, 8.585 percent for 15 years, 8.800 percent for 20 years, 9.050 percent for 25 years, and 10.000 percent under a 30-year fixed-pricing period,” Pag-IBIG said.
To be able to get the 5.5-percent rate, the borrowers’ monthly amortization should not exceed 30 percent of gross monthly income and the ratio of the loan amount to the appraised value of the collateral should not exceed 75 percent, according to Pag-IBIG.
“We hope to entice our members who are eyeing home packages that are priced more than socialized housing. To give our members an idea of how affordable our housing loan package is, the monthly amortization for a P2 Million home loan will be P11,355.78 at 5.5 percent and P12,641.36 at 6.5 percent. The computed amortization consists of the principal and interest,” Berberabe noted.
This is the fifth time the fund has cut its rates in the past five years.
“We have made this possible by improving our fundamentals, that is, by improving underwriting as well as collection. We are focused to further enhancing our housing program to pursue our vision of providing decent shelter for our Filipino workers,” Berberabe said.
“We also offer our Affordable Housing Program, where minimum-wage earners can borrow up to P450,000 for only 4.5 percent per annum. The rate is good for the first 10 years of the loan term which can go up to 30 years.
“This is exclusively for minimum wage earners to help them buy a home for the price of renting one. Now our kasambahays and drivers can actually own homes for monthly amortization of P2,280.08, which include the principal and interest,” Berberabe said.
In 2015, Pag-IBIG Fund approved P55.76 billion of loans to finance the construction or acquisition of 72,270 homes.
This year, it targets to approve more than P60 billion of loans, to finance over 76,000 homes.