HUDCC Chairman Michael Defensor said the council is studying a proposal to liberalize Pag-IBIG loans, including salary loans.
According to Defensor, Pag-IBIG salary loan deductions are now at 16 percent and this could be lowered to 14 percent. Although Pag-IBIG already lends at low interet rates, he said the fund could afford to bring this lower to make the facility more accessible.
"Pag-IBIG has about P72 billion in loanable funds," Defensor said. "the difference between Pag-IBIG and other institutions like SSS and GSIS is that it’s funds are intact."
According to Defensor, the government’s housing agencies have huge funds that need only to be moved and made accessible to borrowers. "This is a question of how much the target market can absorb and this is what we are trying to address," he said.
The National Housing Authority, according to Defensor, has about P5 billion while the Home Guarantee Corp. has P7 billion. Next to Pag-IBIG, the National Home Mortgage Finance Corp. (NHMFC) has the biggest available fund at P42 billion.
The HUDCC has been studying various proposals to further liberalize the government’s housing program in order to address the backing in the socialized housing segment of the property sector.
Defensor said the HUDCC is still evaluating the proposal to shift its housing subsidy to the principal cost of housing and instead allowing market forces to determine the interest rates for subsequent amortizations.
Defensor said the main factor that discouraged borrowers from availing themselves of the program was their inability to frontload the downpayment for their housing loans.
According to Defensor, developers have consistently asked government to deregulate the interest rates on the amortization of low-cost housing projects but the government has had little choice since it could not afford to subsidize the principal itself.
"At present, the government effectively subsidizes interest rates but there is no cash outlay there," Defensor explained. "If we shifted the subsidy to the principal, that means we have to actually shell out cash that borrowers need to meet the downpayment requirements."
However, Defensor said lowering the initial cost of housing loans would encourage more people to avail themselves of the program. "If they are credit-worthy, they could qualify for the subsidy," he said.
Defensor said there is another pending proposal to adjust the government’s interest rate subsidy and increase the minimum amount from P180,000 to P250,000.
At present, the government imposes a fixed nine percent interest rate on housing facilities worth under P180,000 while facilities between P180,000 and P275,000 are covered by a fixed 12-percent interest rate.