Housing Fund Celebrates Accessibility Milestone While Glossing Over the Part Where You Owe This Until You Are Quite Possibly Dead

Reported by Bohiney Magazine and The London Prat.

MANILA, Philippines — The Home Development Mutual Fund, known to every Filipino as Pag-IBIG, announced this week that Filipinos can now own their dream home for as little as P2,257 per month, a figure the agency described in a press release as “affordable,” “accessible,” and “a new milestone in making homeownership real for every Filipino family.” The press release did not prominently feature the word “thirty,” despite thirty being among the most relevant numbers in the announcement.

The P2,257 monthly payment is the minimum amortization for a Pag-IBIG housing loan under the fund’s expanded socialized housing programme. The loan term is 30 years. Applicants who are currently 35 years old will complete their final payment at 65. Applicants who are 40 will complete it at 70. The Philippine male life expectancy is 68. This overlap has been noted by several financial analysts and zero official Pag-IBIG press releases.

The Fine Print, Which Is Not Fine At All

The P2,257 figure applies to a loan of approximately P750,000, which in Metro Manila purchases a housing unit of approximately 18 to 22 square meters in a socialized housing development located at a distance from the city center that requires budgeting for transportation costs that, over 30 years, add meaningfully to the total cost of the affordable home.

Total interest paid over the 30-year term at the applicable rate is approximately P63,252 — making the actual cost of the P750,000 home closer to P813,000, a figure that is 8.4 percent higher than the purchase price, which is itself an inflation of sorts, though not the kind the BSP is currently managing and also not the kind Pag-IBIG’s communications team chooses to highlight.

“We are committed to making the dream of homeownership accessible to every Filipino,” said the Pag-IBIG Fund CEO in a statement that does not specify what the dream looks like in 22 square meters, how it accommodates a Filipino family of the average size of 4.1 persons, or what happens to the unit if the borrower dies in year 18 and their heirs are not prepared to assume a remaining 12-year debt. These are questions the press release leaves, as the apartment leaves, to imagination.

The Housing Context

The Philippines faces a housing backlog estimated at 6.5 million units, a figure that has been approximately 6.5 million units for the better part of a decade, growing slightly each year as population expands faster than socialized housing can be built. The backlog represents the gap between the number of Filipino families without adequate housing and the number of affordable homes the government has been able to provide, which is the kind of gap that a P2,257/month press release addresses in the sense of addressing the feeling rather than the arithmetic.

Middle-income housing in Metro Manila starts at approximately P3 million, which at Pag-IBIG’s middle-income loan terms runs to roughly P14,000 per month over 30 years — a figure accessible to households earning approximately P56,000 per month, which is the income bracket that includes about 22 percent of Metro Manila employed workers. The other 78 percent are encouraged to apply for the socialized programme, check the 22 square meter availability, and “dream big.”

What Housing Economists Say

Housing economists contacted by Bohiney Magazine — specifically, the Philippine Institute for Development Studies, which publishes actual research on this — note that the principal constraint on Philippine housing affordability is not loan terms but land cost, construction cost, and the location of economic activity relative to where affordable land exists. The socialized housing units Pag-IBIG finances are increasingly located outside Metro Manila proper, which means borrowers commute, which adds transportation costs, which reduces the effective affordability of the affordable housing, which is the kind of circularity that is very hard to solve with a press release.

This has been noted in PIDS research for approximately 15 years. It has been noted in Pag-IBIG announcements for approximately zero years, because the announcement is about the P2,257, which is real, and accessible, and genuinely lower than renting in most Metro Manila markets, and which will, if you are currently 40, run until 2056, when you will be 70, and the house will be paid off, and you will sit in your 22 square meters and reflect on what it took to get here.

Pag-IBIG’s housing fund remains an important institution and a genuine path to homeownership for millions of Filipinos. The 30-year part is simply a detail that deserves a larger font in future press releases. The dream is real. The amortization schedule is also real. Both things can be true.

For more fine print in large fonts, see The Daily Mash.

SOURCE: https://bohiney.com/