GSIS offers fixed interest rates for its housing loan

The Government Service Insurance System announced recently that its Bahay Ko Program, a housing loan program, would maintain a fixed interest rate feature to protect member-borrowers from higher amortization due to economic uncertainties.

GSIS president and general manager Winston Garcia said BKP's fixed interest rates-one of the lowest in the industry-would retain the computed amortization despite economic fluctuations in the future that would drive up interest rates.

Garcia said the BKP was "conceived to help GSIS members acquire homes", and its fixed interest rates would give them "peace of mind" because they would not worry anymore about sudden increases in their obligations due to rising rates in the market.

The BPK has the following interest rate structures: eight percent for loans worth P180,000 and below; ten percent for loans worth P 181,000 to P300,000; and 12 percent for loans exceeding P300,000.

Not only are the interest rates fixed, they are also computed annually, which means less amortization for borrowers, said Garcia.

This feature is a radical departure from loan policies implemented by majority of government and privately owned financial institutions, which put interest rates on housing loans under periodic review, he said.

In the late 1990s when financial crisis hit Asia, interest rates skyrocketed to between 30 and 32 percent, pushing the real estate industry to near bankruptcy. As a consequence, many housing loan borrowers-unable to meet their dues- saw their houses foreclosed.

The BKP forms part of the National Housing Shelter program of President Gloria Arroyo that aims to put up shelter for over one million Filipino households in the next six years.

Last year, the GSIS disbursed some P2.8 billion to finance about 4,700 housing loan applications. GSIS plans to double the number of loan takeouts to at least 7,000 by allocating about P4.2 billion for the BKP this year. - Jasmin R. Uy