PHL mortgage rates seen steady until mid-2025

MORTGAGE RATES in the Philippine residential sector are expected to remain unchanged until mid-2025 despite the recent rate cut, according to Colliers Philippines.

“We’ll probably see the full effect by mid-2025, and hopefully that results in lower mortgage rates because the average mortgage rate right now is only about 8.3%,” Joey Roi Bondoc, director for research at Colliers Philippines, told reporters a day before the policy meeting of the Bangko Sentral ng Pilipinas (BSP) on Oct. 16.

“That’s still pretty high, and that has been resulting in lower take-up of residential units, especially in Metro Manila,” he added.

The Monetary Board on Oct. 16 cut benchmark interest rates by 25 basis points (bps), as expected by 16 of 19 analysts in a BusinessWorld poll, since price pressures remain manageable. This brought its policy rate to 6%.

BSP Governor Eli M. Remolona, Jr. said another 25-bp cut to benchmark rates could be made at the December 19 meeting.

Lower mortgage rates will stimulate the market, increasing the demand for residential units, Mr. Bondoc noted.

He added that the mid-income segment is mostly affected by higher mortgage rates.

“If you look at pre-pandemic, at the time, we were looking at the take-up in the preselling condominium sector of 55,000-58,000 units. Now we’re good at what? 15,000, 20,000 units in a single year,” he said.

Mr. Bondoc said that Philippine offshore gaming operators (POGOs) were once a crucial factor in the demand for condominiums in Metro Manila.

“Because if you’re an OFW (overseas Filipino worker), the most attractive price point is the P2.5 (million) to P7 (million). So that’s affordable to lower mid-income. Given that mortgage rates are still elevated, some OFWs are still not keen on acquiring residential units,” he said.

Due to the elevated mortgage rates, OFWs are wary in terms of buying residential units despite increasing remittances, Mr. Bondoc added.

Meanwhile, economist Bernardo M. Villegas said the Philippines continues to be one of the fastest-growing economies in the Association of Southeast Asian Nations region despite global uncertainties.

“With a projected growth rate of over 6% in the coming years, we are poised to lead in economic resilience and transformation,” he said during a forum.

Mr. Villegas noted that the current administration’s efforts have established a “solid foundation” for inclusive growth, with advancements in infrastructure, investments, and the digital economy set to propel our progress further. — Aubrey Rose A. Inosante