BSP Hikes Rates by 0.5%

The BSP raised key interest rates by 50 basis point (0.5%) to combat inflation. The BSP has increased rates by 175 basis points (1.75%) so far in 2022.

Here are some numbers to put the BSP's recent rate hikes in perspective. The first table shows the monthly amortization per million loan amount increase, while the second table shows the monthly amortization per 5 million.

At 5.5%, which is approximately what bank rates for home loans were before the hikes, the monthly amortization for a NEW 15-YEAR LOAN was at Php8,170 per month, PER MILLION.

After the hikes and if a buyer still hasn't applied for the loan, the monthly amortization jumps to Php9,128–a Php957 increase PER MILLION.

So if a buyer were getting a loan for Php5 Mn, the recent rate hikes would have increased by (957.8 * 5) Php4,789.

Quite a minimal increase, right? Look at the total interest paid column. The 1.75% total increase has increased total interest payments for a Php5 Mn loan by Php846,227.

Just something to ponder about.