Ceiling framework for banks’ real estate exposure
- Real estate loans must continue to comply with the ceiling that real estate loans shall not exceed 30% of a bank’s total loan portfolio.
- Real estate loans include loans inclusive of loans not exceeding PHP 3.5 million used to finance the acquisition or improvement of residential units.
- The Circular Letter retains the existing ceiling framework while adding specified exemptions affecting the ceiling’s supporting collateral and aggregate limit requirements.
Exemption for National Shelter Program loans
- The Circular Letter amends the real estate exposure regulations to include an exemption for loans extended to housing developers for socialized and/or low-cost housing projects under the Government’s National Shelter Program.
- The exemption applies to the requirements of BSP Circular Letter dated 5 June 1997 on:
- the reduction of loan values from 70% to 60% of appraised value for real estate collateral, and
- the 20% aggregate limit on real estate loans.
- Loans covered by this exemption are not required to follow the 60% loan-to-appraised-value reduction rule and the 20% aggregate limit applicable under BSP Circular Letter dated 5 June 1997.
Retained limit on real estate loans
- The Circular Letter expressly keeps the rule that real estate loans (inclusive of loans not exceeding PHP 3.5 million) must not exceed 30% of a bank’s total loan portfolio.
- The retained 30% limit governs the overall real estate exposure of banks even with the added exemption for National Shelter Program developer loans.