Even tighter credit standards were noted across real-estate loans in the third quarter this year, as banks passed on to their borrowers the more stringent oversight exercised by regulators on real-estate loans during the period.
In a recent report, the central bank said lenders across the country reported a net tightening of their overall credit standards for real-estate loans in the July-to-September period.
This was the 13th consecutive quarter that the banks indicated a net tightening of standards in real-estate lending under the diffusion index approach, where the number of banks that indicated tighter credit standards proved more numerous than banks that indicated otherwise.
“The net tightening of overall credit standards for commercial real-estate loans was attributed by respondent banks largely to perceived stricter oversight of banks’ real-estate exposure,” the central bank said.
The Bangko Sentral ng Pilipinas previously implemented a number of measures to help monitor the banks’ exposure to real estate as part of the larger effort to keep the financial system stable and avoid asset bubbles and asset erosion down the line.
These included more detailed reports on real-estate exposure and stress tests on the banks, the maiden of which report was seen released later this year.
In particular, respondent banks reported of stricter collateral requirements and loan covenants, along with wider loan margins, reduced credit-line sizes, shorter loan maturities and increased use of interest-rate floors for commercial real-estate loans.
Demand for commercial real-estate loans were steady during the month but a number of banks indicated increased demand for real-estate loans on the back of improved economic outlook, as well as increased customer investments in plants or equipment.
For the next quarter, banks that anticipate a slight tightening of their credit standards outnumbered those expecting the opposite.
-- Business Mirror
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