Demand for real estate loans rose in Q4 2015

BANKS reported higher demand for real estate loans during the fourth quarter of last year on the back of a growing economy, a trend expected to be sustained in the first three months of 2016.

The results of the Bangko Sentral ng Pilipinas’ (BSP) Fourth Quarter 2015 Senior Bank Loan Officers’ Survey showed that “a number of banks indicated increased demand for [commercial real estate loans] on the back of clients’ improved economic outlook and increased customer inventory financing needs.”

In the first quarter of this year, “a number of banks expect demand for commercial real estate loans to increase further” even as the majority of the respondent-banks “anticipate generally steady loan demand,” the BSP said.

According to the BSP, overall credit standards for commercial real estate loans were basically unchanged during the fourth quarter of 2015, as indicated by all 35 universal and commercial banks that participated in the survey.

“The unchanged overall credit standards for commercial real estate loans reflected respondent-banks’ stable economic outlook and unchanged tolerance for risk as well as unchanged profile of borrowers,” the BSP explained.

“In terms of specific credit standards for commercial real estate loans, banks’ responses showed unchanged loan covenants but with wider loan margins, stricter collateral requirements, and increased use of interest rate floors,” it added.

For the first quarter of 2016, the majority of banks said they would “maintain” their credit standards for commercial real estate loans although “a slight net tightening of overall credit standards for commercial real estate loans is seen,” the BSP said.

As for housing loans, the survey showed there was a “slight easing” of credit standards during the October to December period, which respondents attributed to “increased tolerance for risk and the improvement in the overall profile of borrowers.”

“Although most respondent banks foresee maintaining their credit standards for housing loans, a number of banks expect a slight easing of credit standards for this type of loan largely on expectations of higher tolerance for risk” during the first quarter of this year, the BSP said.

“[Survey] results continued to show increased demand for housing loans in the fourth quarter of 2015 as well as expectations of a continued increase in demand for the said type of loan in the next quarter,” it added.