Philippine banks are continuing to support the real estate sector, while taking a more cautious and disciplined approach to risk, according to the latest data from the Bangko Sentral ng Pilipinas (BSP).

As of the third quarter, total real estate loans of local banks reached ₱3.1 trillion, accounting for 19.54 percent of the banking industry’s total loan portfolio. This figure is slightly lower than the previous quarter, indicating that banks are gradually reducing their exposure to the property sector, even as overall lending continues to grow.

Despite this adjustment, real estate lending remains well within regulatory limits. The BSP allows banks to allocate up to 25 percent of their loan portfolio to property-related loans—a cap that was temporarily raised during the pandemic to help stimulate economic activity. Current exposure levels suggest that banks are managing growth responsibly.

Home Loans Lead Growth

Breaking down the data, residential or home loans showed stronger growth, rising by around 11 percent year-on-year to ₱1.2 trillion. Commercial real estate loans, which include offices, retail spaces, and other income-generating properties, increased by about 7.4 percent to ₱1.9 trillion.

This trend reflects sustained demand for housing, supported by lower interest rates and improved borrower confidence.

Improving Loan Quality

While the total peso value of nonperforming real estate loans stood at ₱116 billion, the nonperforming loan (NPL) ratio declined to 3.75 percent, slightly lower than the previous quarter. This means that although some loans remain unpaid or delayed, the overall quality of bank loan portfolios has improved.

Both residential and commercial real estate loans showed modest improvements in repayment performance, helped by the BSP’s recent interest rate cuts, which have reduced borrowing costs for consumers and businesses.

Strong Oversight Supports Market Stability

To ensure financial stability, the BSP continues to enforce strict safeguards. Banks are required to undergo stress tests to demonstrate that they can withstand scenarios where a significant portion of property loans may default. These measures help prevent excessive risk-taking and protect the broader financial system.

What This Means for the Property Market

The latest data shows a balanced outlook for the Philippine real estate sector. Banks remain willing to lend, borrowers are benefiting from lower interest rates, and regulators are maintaining close oversight.

For buyers, investors, and property owners, this signals a market that is stable, cautiously optimistic, and supported by a resilient banking system—conditions that are favorable for long-term real estate growth.