GSIS to stick to fixed interest rate

To encourage more members to realize their dream homes, the Government Service Insurance System will stick to the fixed interest rate feature of its housing loan program.

The fixed rate scheme is a radical departure from the policy being implemented by majority of government and privately owned financial institutions, which subject interest rates on housing loans to periodic review.

GSIS president and general manager Winston Garcia said fixed interest rates are meant to protect members availing of the GSIS housing loan against economic uncertainties-such as high inflation rates-that consequently lead to higher interest rates.

The GSIS housing loan window, called the Bahay Ko Program, has the following interest rate structures: eight percent for loans worth P180,000 and below; ten percent for loans worth P 181,000 to P300,000; and 12 percent for loans exceeding P300,000.

Not only are the interest rates fixed, these are also computed annually, which means less amortization for borrowers.

"The BKP was conceived to help GSIS members acquire homes. As a value added, we wanted the program to give our borrowers peace of mind," Garcia said.

The GSIS chief said with the BKP interest rates-incidentally, one of the lowest in the industry-borrowers can allocate repayments years ahead of schedule without worrying about sudden increases in their obligations.

Garcia said the scheme would shield borrowers from wild fluctuations which happened during the late 1990s, when interest rates skyrocketed as a result of the Asian financial crisis.

During that time, interest rates went up to as high as 30 to 32 percent, pushing the real estate industry to near bankruptcy. As a consequence, many housing loan borrowers-unable to meet their dues- saw their houses foreclosed.

The BKP forms part of the National Housing Shelter program of President Gloria Macapagal Arroyo that aims to put up shelter for over one million Filipino households in the next six years.

Last year, the GSIS disbursed some P2.8 billion to finance about 4,700 housing loan applications. The state pension fund is eyeing to double the number of loan takeouts to at least 7,000 by allocating about P4.2 billion for the BKP this year. - Jasmin R. Uy