MANILA, Philippines--Local thrift banks have expanded their exposure in the real estate sector by 11 percent in 2007 to hit P84.4 billion, mostly used to finance purchases of residential property by individual homeowners, the Bangko Sentral ng Pilipinas, the Philippine central bank, said Monday.

The sector's real estate exposure as of end-December was also higher than the level recorded a quarter ago, or as of end-September.

Of the amount extended, 79.6 percent went to individual borrowers while the remaining 20.4 percent was used for the construction and development of real estate property for commercial purposes.

The thrift banks' past due real estate account stood at 9.4 percent of the total last year, better than 10.2 percent a year ago.

The BSP is encouraging thrift banks to provide microhousing loans for the poor and complement their microfinance operations.

The new housing microfinance framework approved by the BSP, which aims to help the low-income segment of the population, allows banks to offer loans for home improvements, house construction as well as house/lot acquisition for as long as they apply microfinance principles and best practices. They must identify borrowers who are "economically active" or has a source of loan repayment through a livelihood activity.

Microfinance has been recognized across the world as an effective formula in transforming disadvantaged individuals into financially independent entrepreneurs. Loan sizes are typically small, not exceeding P150,000. Grant of loans to a group or individual is based on the borrower's household income and nontraditional forms of security are acceptable.