Philippine banks’ exposure to real estate lending remained near multi-year lows in the first quarter of 2026, as domestic lenders maintained a cautious approach to the property market while focusing on other growth areas.

According to the latest data from the Bangko Sentral ng Pilipinas (BSP), the ratio of real estate loans (REL) to the banking system’s total loan portfolio stood at 19.1 percent as of end-March.

While this reflects a slight pick-up from the 18.96 percent recorded in December 2025—which marked a seven-year low since December 2018—it remains lower than the 19.44 percent reported in the same quarter last year.

During the first quarter of 2026, combined REL from banks and trust units expanded by 8 percent year-on-year to ₱3.20 trillion from ₱2.97 trillion. Quarter-on-quarter, REL grew by 1.7 percent from ₱3.15 trillion at the end of December 2025.

Meanwhile, total real estate investments (REI) decreased by 5.4 percent to ₱352.2 billion from ₱372.4 billion in March last year. This also edged down by 2.1 percent from the ₱359.8 billion reported at the close of the fourth quarter of 2025.

By segment, residential REL increased by 8.4 percent to ₱1.23 trillion as of March, up from ₱1.13 trillion a year ago. Commercial REL also saw growth, rising 7.7 percent to ₱1.97 trillion from ₱1.83 trillion over the same period.

REI, which consists of debt and equity securities, showed diverging trends. Equity securities inched up to ₱116.5 billion from ₱116.4 billion last year, while debt securities dropped by 7.9 percent to ₱235.7 billion from ₱256 billion.

Looking strictly at bank proper REL (which excludes trust departments), the total reached ₱3.20 trillion, up 8 percent from ₱2.96 trillion last year. Banks’ own REI stood at ₱94.1 billion, down 3.3 percent from the ₱97.3 billion reported a year earlier.

Ruben Carlo O. Asuncion, chief economist at Union Bank of the Philippines, said that exposure hovering near multi-year lows indicates domestic banks are “being constrained by a combination of prudential limits, cautious risk management, and stronger growth in non-property lending segments.”

According to Asuncion, banks are carefully managing their regulatory headroom under the BSP’s 20 percent ceiling on real estate exposure. Alongside this, financial institutions are actively diversifying into both corporate and consumer loan books.

“Lingering concerns over certain property segments, alongside the lagged impact of previously tighter financial conditions, are also keeping credit allocation measured,” Asuncion said. “As a result, any increase in real estate lending has been gradual and broadly in line with overall portfolio growth rather than a decisive upward shift in share.”

Jonathan Ravelas, senior adviser at Reyes Tacandong & Co., viewed this slow consolidation of portfolio share as a sign of strategic caution among domestic lenders, rather than a lack of appetite.

“Until we see clearer signs of sustained demand recovery, stable rates, and improving occupancy, real estate will likely stay range-bound in bank portfolios and won't act as a major growth driver,” Ravelas said.