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Pag-IBIG eyes lower rates

By: Vanessa Claire Lucero January 11,2016 - 05:07 AM
The Home Development Mutual Fund targets to finance the construction of 8,558 housing units in the Visayas this year. (INQUIRER PHOTO)

The Home Development Mutual Fund targets to finance the construction of 8,558 housing units in the Visayas this year. (INQUIRER PHOTO)

THE Home Development Mutual Fund (HDMF), or Pag-IBIG Fund, hopes to reduce interest rates soon.

“Based on an actuarial study by Pag-IBIG, if you can reduce expenses or if you can reduce additional hiring of manpower, you can reduce the rates,” said Rio R. Teves, Pag-IBIG Cebu officer-in-charge.

The agency targets a housing loan takeout of P5.82 billion to finance the construction of 8,558 housing units in the Visayas this year.

Teves said the target for Cebu hub alone is P4.114 billion in loans, higher than the 2015 target of P3.56 billion. Actual takeout last year was P2.99 billion, which financed 3,224 units out of the 5,783 targeted housing units.

The average amount loaned by borrowers last year was P883,000 per unit.

With lower rates, Teves said the Fund will be able to better compete with banks, which currently offer much lower rates.

Teves pointed out, however, that the filing fee and other processing charges imposed by the Fund are lower than those in the banking sector.

Additional costs in banks can go as high as P20,000, Teves said.

With Pag-IBIG, borrowers need to shell out only P1,000 for the filing fee. The additional P2,000 loan approval fee can be included in the loan amount.

Pag-IBIG is also more lenient, imposing penalties based on the regular payment or amortization of the borrower, compared to banks which use the outstanding balance of the client as basis for the penalties, Teves said.

Failure to reach targets last year was traced largely to the low takeout rate under the Home Rehabilitation and Reconstruction program for typhoon victims, Teves said.

Out of the P1.35 billion allotted for the typhoon victims, only 16 percent was released.

“Not a lot of people availed. There are many reasons as to why people do not avail,” Teves said.

He cited problems with titles and records that were washed away or damaged by the typhoon; lack of socialized housing developers in Tacloban and other Yolanda-affected areas; high cost of land; absence of land title; and victims’ expectation that help is free.

Under the program, Supertyphoon Yolanda victims will not be charged interest for the first six months after availing of the loan. From the 7th to 24th month, borrowers will have a special interest rate of only 4 percent. The agency’s regular interest rate of 6.5 percent for a P450,000 loan will be imposed only after two years.

The agency’s poor collection remains the most pressing concern.

“Good for us now that there are law firms authorized to engage in collection with delinquents,” Teves said.

In mid-2014, the agency outsourced collection of payments to four law firms. Collection efficiency increased to 86 percent in 2015 from 78 percent in 2014. The 2016 target for collection efficiency is 90 percent.

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