MANILA Nov 30 The Philippine central bank has
approved new rules on mortgage loans as it intensifies oversight
of real estate finance to prevent an asset bubble in one of
fastest-growing sectors of the economy.
The Monetary Board called the new voluntary guidelines,
developed largely by the banking industry, a "milestone" because
they set uniform rules and recognise the risks involved in what
was previously an unmonitored practice by property firms that
signed contracts with homebuyers which they later on-sold to
The practice has been instrumental in the current property
boom which has seen mortgage loans rising 23 percent by value at
the end of June to hit a four-year high, according to the latest
central bank data.
Some property analysts have expressed concerns of a possible
bubble in the middle-market segment of the residential
condominium sector, amid an ongoing flurry of construction as
developers compete for homebuyers confident of spending in an
environment of strong growth and low interest rates.
Under the new rules, both real estate developers and their
housing projects must first be accredited by banks before they
can sell their receivables to the formal banking sector.
Homebuyers holding contracts from property firms can only be
granted bank loans if they have paid at least 10 percent of the
total home value, either through equity or downpayment.
"The BSP (Bangko Sentral ng Pilipinas) has been stepping up
its oversight of real estate finance. The actions it has taken
are designed to prevent excesses that may lead to financial
crisis," it said in a statement.
"They are pro-active steps meant to mitigate any potential
easing of banks' credit standards under a global regime of low
In August, the central bank said it would tighten rules on
banks' real estate exposure to address the financial system's
vulnerability to asset bubbles.
(Reporting by Karen Lema; Editing by Rosemarie Francisco and