By Chino S. Leyco
State-run Home Development Mutual Fund, commonly known as Pag-IBIG Fund, plans to double the monthly savings that its members remit to the agency to maintain the low interest rate being enjoyed by the borrowers.
In a briefing, Eduardo D. Del Rosario, Pag-IBIG Fund chairman, said they have unanimously approved a one-time increase in monthly savings contribution from the present P200 to P400 by 2021.
According to Del Rosario, the P200 increase, which will be equally shared by the employer and the member, aims to address the ballooning gap between Pag-IBIG’s savings contribution and loan releases.
If Pag-IBIG fails to implement the increase, Del Rosario warned the housing agency would have to limit its lending program or borrow money from private banks that would result in higher interest rates for home borrowers.
“That increase is actually an investment, this part of their savings,” Del Rosario told reporters. “It’s not a burden on the part of Pag-IBIG members. It will be a burden on the part of employers.”
Del Rosario also cited that it is timely to adjust Pag-IBIG’s P100 savings rate set in 1988 after being eroded by inflation and it is now equivalent to P1,398.09.
“We have a timeframe of reaching out to all stakeholders so that there will be a widespread acceptance of this plan. We have to do this because we don’t like to increase the interest rate being given by the Fund to all our members,” Del Rosario said.
If the increase in implemented beginning 2021, Acmad Rizaldy P. Moti, Pag-IBIG Fund chief executive, said they expect to generate P26 billion in additional revenues annually.
Moti added the three-decade-old members’ saving rate should be adjusted upward to keep up with the rising demand for housing loans while retaining the fund’s artificially low interest rates.
In 2018, Pag-IBIG incurred a funding shortfall of P35 billion after its total housing loan releases of P75 billion outpaced its revenues from members’ savings or contributions, which only stood at P40 billion.
In January, Pag-IBIG reported that its net income reached P31.23 billion last year, higher by three percent compared with P30.27 billion in the previous year.
According to the government’s housing arm, its members’ savings collection last year was the “highest ever” at P40.27 billion, up by 11 percent year-on-year, while the modified Pag-IBIG 2 Savings Program amounted to P4.27 billion, which is also higher than the previous year’s by 242 percent.
In 2018, Pag-IBIG’s home loan takeout grew by 16 percent to P75.31 billion, while home loan borrowers increased by 12 percent to 90,375 and home loan payments collections jumped by nine percent to P55.73 billion.
Among the housing lenders in the country, Pag-IBIG still offers the lowest rates for socialized and regular housing at three percent and 5.375 percent per annum, respectively.