MORE BORROWERS are likely to take out residential home loans once the economy improves, Asia United Bank Corp. (AUB) officials said.

“We are optimistic that the real estate industry will be among the sectors that will bounce back fastest once the economy recovers, which bodes well for consumer appetite for home loans,” AUB Assistant Vice-President and Team Leader for Home Loans Reginald Neil P. Garcia said in a statement.

The bank’s loans have already recovered, growing year on year mainly due to base effects. However, the pandemic has affected consumers’ incomes, making it hard for them to qualify for credit, AUB Consumer Loans Group Head Leo F. Intalan said.

“With the increase in unemployment and underemployment rates, the list of qualified borrowers have consequently shrunk,” Mr. Intalan said in an e-mail.

He added that the bank also saw evolving preference for housing units due to the pandemic. He noted that while condominium units remain as the primary type of housing that borrowers seek financing for, more clients now prefer landed homes.

“Starting last year, its (condominium units) share has lessened because customers are starting to prefer house and lots for their natural ventilation. Borrowers for vacant lots are also increasing,” Mr. Intalan said.

While interest rates have been reduced to record lows amid the crisis, Mr. Garcia said borrowers must brace for a sudden uptrend in yields once the economy recovers.

AUB offers a service called home rate protect, which gives borrowers access to fixed rates of 6% for one year, 6.5% for three years, and 7% for five years.

“This means clients who choose the one-year fixing rate of 6%, for example, will get their loan repriced at only 6.25% (additional 0.25% per year) if they pay their monthly amortizations on time. Other banks, on the other hand, reprice their home loans at an additional 1% to 2% every year, regardless of whether the borrowers pay on time or not,” AUB said.

Borrowers who avail of the product will also not have their home loans priced higher than 9%.

“Our primary objective is to offer our clients a sense of security and free them from worry should loan rates start to escalate,” Mr. Garcia said.

AUB earlier said it expects its net profit to grow by 30% to P4 billion this year as improving consumer confidence will likely boost its lending business.

The bank’s net income increased 7.72% year on year to P1.2 billion in the second quarter amid lower buffers for expected loan losses.

Despite this, AUB’s net earnings in the first semester dropped 17.4% year on year to P1.9 billion due to lower trading and securities gains.

AUB’s shares closed at P44.75 apiece on Tuesday, up by 25 centavos from its previous finish. — L.W.T. Noble