Mortgage market remains small

Few major banks in the Philippines offer housing loans. And although loan-to-value ratios of 90% are now in theory being offered and loan tenors can be as long as 30 years, in fact most loans are short-term. Banks are wary because land titling and registration problems are prevalent, as are lengthy delays in the foreclosure process due to the country’s very weak court system.

Therefore approval of loan applications takes a long time. In addition inter-bank collusion prevails: different banks’ loans have strangely similar terms and conditions.

Property buyers also face high transaction costs, corruption and red tape, fake land titles and substandard building practices. Plus, the large informal housing sector and their incentives make it less attractive for low to middle income families to buy or rent properties.

Because of these factors, the ratio of residential mortgage loans to GDP remains small, at around 4.4% of GDP in 2022, a slight increase from 2.4% of GDP in 2012. Most houses in the Philippines are sold for cash or pre-sold, with the developers offering financing.

In 2022, the total outstanding residential real estate loans rose by 5.4% to PHP 943.7 billion (US$17.1 billion) from a year earlier, according to figures from the BSP. It was a deceleration from a growth of 7.5% in 2021 and an annual average growth of 16.1% from 2010 to 2020.

https://www.globalpropertyguide.com/Asia/philippines/Price-History