PHILIPPINE NEWS SERVICE — To make housing “truly affordable and accessible,” Vice President Noli de Castro yesterday announced that the Pag-IBIG Fund has reduced the interest rate for housing loans to 7 percent.
The rate cut covers loans ranging from P300,000 to P750,000, said De Castro, also chairman of the Housing and Urban Development Coordinating Council and the Pag-IBIG Fund Board of Trustees.
The latest round in the interest rate reduction is aimed at the middle-income bracket earning an estimated P16,000 to P20,000 per month, and who constitutes 23 percent of the labor work force, according to the National Statistics Office. “This is the next logical step to take. Remember that in November 2006, we already addressed the affordability issue of the lower income brackets or the 77 percent of the work force, when we reduced the rate from nine to only six percent per annum for a P300,000 housing loan,” De Castro said.
With the 7 percent interest rate, the monthly amortization (covering principal and interest only) is now down from P6,860 to P4,990 for housing loan packages of P500,000 to P750,000. Expected to benefit from the lower interest rates are accountants, college professors, managers, and supervisors, to name a few.
But De Castro stressed that carrying out ‘‘an honest-to-goodness interest reduction scheme’’ should also be complemented by streamlined loan requirements. He directed the fund’s senior management to ‘‘look at the requirements of the banks and see how we can further improve this area.’’
De Castro also directed the senior management to undertake five key measures to enhance the fund’s viability anticipating the impact of the interest rate adjustment in the net income of the corporation.
These include: improving collection efficiency, improving returns from its investments, speeding up the disposition of its acquired and non-performing assets, improving organizational efficiency including specific measures to reduce operating costs, and diversifying income sources.
‘‘I want the senior management to report monthly, on the progress of these five measures, specifically, the savings or income that will be generated from them, to recover any projected foregone income.’’
“At the end of the day, we need to make a substantive difference in the lives of our more than 6.6 million members. The consistent strong performance and profitability of the fund can now give us the opportunity to make our members, and not the corporation, more liquid. In fact, we are willing to accept a reduction in our net income if this would mean plowing back more housing and other benefits to them,” said De Castro.