More Rate Hikes Coming

Inflation expectations for 2023 remain high, with the BSP revising its forecast from 4.3% to 4.5%. With analysts expecting more rate hikes in the US (albeit at a slower pace), investors expect the BSP to follow suit and increase key policy rates further. In fact, BSP Governor Medalla was quoted by PhilStar saying, "the likelihood of zero [interest rate hikes] in the next two meetings is extremely low.”

Relating this to the RE industry, borrowers can expect even heftier increases in their monthly amortization. Especially hit will be buyers who purchased pre-selling properties (that will be turned over next year) and looking to bank finance the balance.

Assuming the BSP increases interest rates by another 1% (0.5% each in the next two meetings), this would possibly push home loan rates to double-digit territory.