Banks tighten lending standards

Banks continued to impose tighter credit standards for real estate loans amid less favorable economic conditions and deterioration in borrowers’ profile due to COVID-19.

Dennis Lapid, deputy director of the Department of Economic Research at the Bangko Sentral ng Pilipinas, said the results of the fourth quarter 2020 Senior Bank Loan Officers’ Survey showed a net tightening of credit standards for commercial real estate loans for the 20th consecutive quarter.

Lapid shared, “Respondent banks pointed to a less favorable economic outlook, a lower tolerance for risk, as well as deterioration in borrowers’ profile as the major contributors.”

On specific credit standards, he said the net tightening of overall credit standards for commercial real estate loans continued to reflect wider loan margins, reduced credit line sizes, stricter collateral requirements and loan covenants, increased use of interest rate floors, and shortened loan maturities.


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