MANILA -Amid expectations that interest rates won’t be going up anytime soon, now is a good time to borrow money for big-ticket expenses such as homes, cars or even a business expansion, according to Metropolitan Bank and Trust Co. (Metrobank).
The benchmark rate of the Bangko Sentral ng Pilipinas (BSP) is widely believed to remain unchanged for the second month in a row at 6.25 percent when the Monetary Board decides on the policy stance today, June 22.
READ: BSP seen holding key policy rate steady at 6.25%
Even then, Metrobank reminds borrowers to review their “financial health,” considering that while a pause on rate hikes does not make borrowing money more expensive, it also does not make it less costly.
Lenders use the debt burden ratio (DBR) to compute the amount that a borrower is able to repay in a period. A gauge of who may qualify for a loan, the DBR is the total monthly loan payments divided by the monthly income. A high DBR, expressed in percent, means low financial capacity to pay for additional loans.
“As a guideline, your total loan payments should be in the range of 30 percent to 35 percent of your monthly income,” Metrobank said. “If you can keep your total monthly repayments in that range, this will give you enough elbow room to pay for your essential expenses, while also having some savings or even investments.” INQ
READ: After pause in rate hikes, BSP to mimic US Fed