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Best time to avail of Pag-IBIG loan

Vernon Velasco



Now is the time to have a home, says Moti. PHOTOGRAPH COURTESY OF PAG-IBIG

There’s no better time to avail of a Pag-IBIG loan than now, said Pag-IBIG Fund CEO Acmad Rizaldy Moti on Tuesday.

What with the agency’s programs that not only provide its members a relief on loans, but prevent a big downturn on the low-cost housing industry.

In an exclusive with Daily Tribune’s webcast “Straight Talk,” Moti said Pag-IBIG Fund was the first government agency to initiate a three-month moratorium on all loans during the enhanced community quarantine (ECQ), and declare a mandatory grace period of 30 days on loan payments by virtue of the Bayanihan to Heal as One Act.

“Between our own moratorium for three months versus the grace period under the Bayanihan to Heal as One Act, the latter has a bigger impact on the Fund financially. We have to give our members the option to pay on a staggered basis until the end of the long term. We have loans with maturity of up to 30 years,” Moti said.

“It’s not good news if we compare it to the previous year’s performance, specifically last year. But, comparing it with other similar-sized industries, like commercial and universal banks (which have a huge drop in their net income), Pag-IBIG Fund is doing great. We have prepared the Fund quite nicely because, over the years, we have strengthened our investible fund and position.”

One of the silver linings of this pandemic, according to Moti, is that it allowed Pag-IBIG to reposition its government securities.

“We have around P34 billion that used to carry mark-to-market losses, which was as high as P17 billion. If we sold them, we would have lost 30 percent of the value. But we have repositioned them to be very proactive and to support our lending for the next 12 to 18 months.”

As of June this year, Pag-IBIG’s housing loan portfolio is at P520 billion.

Even during the lockdown, Pag-IBIG had already started to engage the socialized and low-cost housing industry by talking to developer associations, addressing it through a two-pronged strategy.

On the supply side, Pag-IBIG allocated up to P10 billion to provide liquidity with the developers while working with other government agencies. And, on the demand side, it pushed for the lowering of the rates. The promo will run until the end of the year to encourage members who may have thought of delaying their purchase to push through with their decisions.

“For a three-year fixing, it used to be 6.375 percent; it’s now down to 5.375 percent. That’s a hundred basis points reduction for our one-year fixing, which is already the lowest in the market. From 5.3 percent, it’s now down to 4.9 percent. Now is the right time to do it.”

On the other hand, Pag-IBIG has regrouped its calamity and multi-purpose loans, and lumped them into short-term loans.

“There’s a 37 percent drop in the availing of these loans year on year. It’s mainly because, during the first two and a half months, we were on ECQ and modified enhanced community quarantine, and our members couldn’t go to our branches. So, we allowed our borrowers to file calamity loans via e-mail.”

Pag-IBIG was nevertheless able to process billions of pesos in short-term loans. The housing loan, meanwhile, plunged from P37 billion in the first half of last year to P20 billion this year due to quarantine restrictions that hindered them from doing usual business with the agency.

With Pag-IBIG’s new interest rates, the agency has lent almost P5 billion in July, a far cry from June’s almost P3 billion.

“That’s a 40 percent spike in the borrowings of our members and we hope that, this month, it would go up to P7 billion, which will be our pre-pandemic level of business.”

Taking hint from the Subprime mortgage crisis in the US in 2008, which crippled the country’s economy due to a lack of liquidity and credit, the plan according to Moti, is to prevent a huge drop in production level in socialized and low-cost housing, and to influence the immediate recovery of the low-cost housing industry, including socialized housing by providing so much liquidity.

“What we’re trying to prevent is for our partner-developers (around 600 of them all over the country) to suddenly delay their expansion plans. In May, we increased our budget for debt loans or house consumption financing line, which is providing liquidity to developers who have yet to get takeouts from us.”

In terms of the short-term outlook in the property sector, Pag-IBIG is prepared to bring the level of loans a year to 100 billion by end of 2020.