7/22/2015

HUDCCRaisesEconomicHousingLoanCeilingToP1.7MillionfromP1.25Million

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Million

HUDCC Raises Economic Housing Loan Ceiling

To P1.7 Million from P1.25 Million
UpdatedonJuly17,2015byCherryViSalduaCastillo Leaveacomment
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The Housing and Urban Development Coordinating Council (HUDCC) approved HUDCC
Resolution No. 2, Series of 2015 on June 8, 2015, increasing the Economic Housing loan ceiling
17

from P1,250,000.00 to P1,700,000.00. The said resolution was published in The Philippine Star

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(print and digital edition) last July 14, 2015.

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HUDCCRaisesEconomicHousingLoanCeilingToP1.7MillionfromP1.25Million
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My first thought was that more developers would be willing to produce units under economic
housing since the threshold is now P1.7M. According to this article, the Philippines has a housing
backlog of 5.5 million houses, and 60% of the housing needs are for socialized and economic
http://www.foreclosurephilippines.com/economichousingloanceilingnowp17million/

The importance of time freedom,

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7/22/2015

HUDCCRaisesEconomicHousingLoanCeilingToP1.7MillionfromP1.25Million

The importance of time freedom,

one example why I want to be
financially free

backlog of 5.5 million houses, and 60% of the housing needs are for socialized and economic
houses.

By Jay Castillo

I found a link to the Philippine Housing Industry Roadmap: 2012-2030 prepared by the
Subdivision and Housing Developers Association, Inc. (SHDA) and I was happy to know that

View More Real Estate Investing Tips

developers are working towards filling the backlog.

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Aside from responding to the peoples housing needs, the developers will also be earning a
handsome sum since socialized and economic housing projects are part of the 2014 Investment
Priorities Plan (IPP)activities which may be granted an Income Tax Holiday (ITH) of 3 to 4 years.

Select Category

Considering that the corporate income tax rate is thirty percent (30%), the ITH incentive is
significant. No wonder big developers all have their socialized and economic housing brands
(like Amaia and Bella Vita for the Ayala Group).
I read the 2014 IPP again though and noted that socialized and economic housing for purposes

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of the IPP was above P450,000 up to P3M so it appears that the increase in loan ceiling as per
HUDCC Resolution No. 2, Series of 2015 has no effect on the ITH.
Recent Comments

With regard to construction standards for socialized and economic housing, the same standards
under BP 220 will still apply.

Matt on Will there be a Real Estate Bubble in the

What is the effect of a Home Guaranty Corporation

(HGC) guaranty?
The above resolution quotes Section 15 of R.A. 8763[HGC Act of 2000] so I took a closer look at it.
It provides:

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The Corporation shall guarantee accounts under this Act, as follows:

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Estate Deals (Ill Show You How)

At least forty percent (40%) of guaranty accounts shall be allocated for

socialized housing packages;
At least thirty percent (30%) of guaranty accounts shall be allocated for
low-cost housing packages;
At least twenty percent (20%) of guaranty accounts shall be allocated for
medium-cost housing packages; and
Not more than ten percent (10%) of guaranty accounts may be allocated for
open housing packages.
For the foregoing purpose, the respective ceilings for socialized, low-cost, mediumcost, and open housing shall be jointly determined by the Housing and Urban
Development Coordinating Council and the National Economic and Development
Authority: Provided, That at any time, but not more often than once every two (2)
years, such ceilings may be reviewed or revised to conform to prevailing economic
conditions.

I then checked the Frequently Asked Questions (FAQ) page of HGC and learned the benefits of an
HGC guaranty:
ADVERTISEMENT

What are the benefits of the HGC

Guaranty?
It guarantees the payment of the
guaranteed loan or investment
http://www.foreclosurephilippines.com/economichousingloanceilingnowp17million/

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7/22/2015

HUDCCRaisesEconomicHousingLoanCeilingToP1.7MillionfromP1.25Million

balance outstanding and due on

the principal obligation, plus
interest yields of up to 11%;

It exempts the interests derived and other yields from the loan from all forms of
taxes(up to 11% rate of interests);

For socialized housing, those with contract prices of P 400,000.00 and below are
entitled to the maximum cover and tax-exempt interest of up to 11%, and;

The Government of the Republic of the Philippines guarantees the payment of

HGCs obligations.

Home loan borrowers can borrow up to 90% of the appraisal value of collateral
property.

Banks are exempt from the Banko Sentral ng Pilipinas (BSP) capital reserve
requirement for HGC guaranteed loans

Banks are freed-up from administrative burden when a loan defaults

With the above, it dawned on me that since a big percentage of HGC guaranty accounts will be
allocated for loans for houses costing up to P1.7 million, Pag-Ibig and other banks will have less
risk should their borrowers default on their loans since they will be backed by an HGC guaranty.
With less risk,they will have more incentive to lend and maybe even consider lowering their
interest rates.
I tried to read more about securitization since HGC has something to do with that but right now
my brain is not absorbing it (sorry!). Can anyone explain this?
What do you think arethe effects of this HUDCC Resolution? Are they positive or negative?

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HUDCCRaisesEconomicHousingLoanCeilingToP1.7MillionfromP1.25Million
Distressed Debt Snapshot For The Philippines March 2015

Updated: July 17, 2015 | Filed Under: Real Estate News Tagged With: economic housing, socialized housing

PNB Foreclosed Properties Auction In Cauayan City, Isabela Slated On July 30, 2015
Is It True That The Maximum Loanable Amount For New Housing Loans Is Just 60% of the Appraised Value?

About Cherry Vi Saldua Castillo

Cherry Vi Saldua Castillo is a Real Estate Broker (PRC Real Estate Broker License No.
3187), Lawyer (Roll ofAttorneys No. 55239), and CPA (PRCCPA LicenseNo. 0102054).
She is the2013 Internal Education Head of REBAP-LMP

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