Pag-IBIG keen on keeping loan rates low, dividend payouts high

MANILA, Philippines — Despite high inflation and a weak peso, the Home Development Mutual Fund (HDMF) or the Pag-IBIG Fund is confident it can still maintain the low interest rates it offers for home and cash loans.

Eduardo del Rosario, chairperson of the Housing and Urban Development Coordinating Council (HUDCC) and Pag-IBIG Fund Board, said Pag-IBIG’s strong financial performance would enable the fund to keep its low interest rates.

“The year is not over yet but Pag-IBIG Fund already performed better than expected. There was strong demand for and availment of our housing and cash loans in the last three quarters,” Del Rosario said in a statement.

“We are very confident that the rates of Pag-IBIG Fund will remain low and we don’t foresee an increase in housing interest rates in the next few years because of the strong financial standing of the fund. These low rates directly benefit Pag-IBIG members and contributes greatly to the anti-poverty agenda of the administration of President Duterte and the BALAI Filipino program of the government’s housing sector,” he added.

Pag-IBIG Fund currently offers an interest rate of three percent per annum for loans up to P580,000 under the affordable housing program. Rates for loans up to P6 million under the fund’s regular housing loan program carry an interest rate of 5.375 percent per annum.

Meanwhile, short-term loans or cash loan programs known as multi-purpose loan and calamity loan come with rates of 10.5 percent per annum and 5.95 percent per annum, respectively.

From January to September, HDMF increased its housing loan releases by 14 percent to over P51.76 billion to help fund 62,665 homes.

Cash loans, on the other hand, amounted to P37.42 billion, benefiting more than 1.8 million borrowers.

“Aside from the strong demand for our home loan programs, our efforts to improve our home loan portfolio have paid off. We maintained our performing loans ratio at 90 percent even as we cater to minimum- wage earners who are shunned by banks,” Pag-IBIG Fund chief executive officer Acmad Rizaldy Moti said.

Moti said this efficiency enabled Pag-IBIG to increase its collections by double digit in the first three quarters.

As of the  end of September, home loan collections rose 10 percent to P41.49 billion. Cash loan payments also climbed two percent year-on-year to P40.08 billion.

Due to the robust growth in its collections, Moti said Pag-IBIG would again achieve a record-breaking income this year higher than the P30.27 billion net income posted in 2017.

He expressed confidence the fund would be able to surpass its P30.6 billion net income target by as much as P2 billion despite offering low interest rates.

“This is the ultimate win-win situation because our borrowers are treated to one of the lowest, if not the lowest, rates in the market. The low rates fuel demand, which in turn helps improve our net income,” Moti said.

“And when our net income is high, all Pag-IBIG members can expect to benefit from dividend payouts which are much higher than what they earn from other financial institutions,” he added.

The Pag-IBIG chief said the dividend rate for 2018 is projected to settle between 6.5 percent and  seven percent.