Here’s a shocking reality: despite the Philippine central bank’s aggressive efforts to stimulate the economy by slashing its key policy rate by nearly two percentage points to 4.75% since last year, the average Filipino homeowner is barely feeling the relief. But here’s where it gets controversial—while the central bank aims to make borrowing cheaper, the nation’s top banks seem to be playing by their own rules. For instance, BDO Unibank Inc. still charges a 6% fixed rate on new housing loans for the first year, with the option to reprice afterward, or a 6.5% fixed rate for five years. These rates are virtually unchanged from 2024, and competitors like Bank of the Philippine Islands and Metropolitan Bank & Trust Co. are following suit. And this is the part most people miss—the disconnect between central bank policies and actual lending rates raises questions about the effectiveness of monetary policy in reaching everyday borrowers. Is this a deliberate move by banks to protect their profit margins, or a reflection of deeper economic challenges? Let’s dive deeper: when central banks cut rates, the goal is to encourage spending and investment by making loans more affordable. However, if commercial banks don’t pass on these savings, the intended economic boost may never materialize. This situation isn’t unique to the Philippines, but it’s particularly striking given the country’s growing housing market and the urgent need for affordable financing. Here’s a thought-provoking question for you: Should governments intervene more directly to ensure banks align their lending rates with central bank policies, or is this a natural outcome of market dynamics? Share your thoughts in the comments—this is a conversation worth having.
