Gov't to provide 5% annual interest subsidy for low-cost housing beneficiaries —DHSUD exec

The government will provide an annual 5% interest subsidy to the beneficiaries of the government’s Pambansang Pabahay Para sa Pilipino Program or low-cost housing program for 10 years, according to an official of the Department of Human Settlements and Urban Development (DHSUD) on Tuesday.

DHSUD Undersecretary Garry De Guzman made the statement after House appropriations panel vice chairperson Stella Quimbo who expressed concern about the government’s plan to provide such an interest subsidy, given that 50,000 housing units for the program would already require P1.5 billion worth of interest subsidy every year.

The government’s target low-cost housing units to be built in a year under the said Pabahay Program, however, stands at one million housing units in a year.

"We are studying this and we don’t think the interest subsidy will run for the next 30 years on the assumption that they will improve their lives with increased salary, increase in the value of property, so there is a waning away period. That is what we call it," de Guzman told the House appropriations panel during the deliberations of the DHSUD’s proposed P5.9 billion budget for 2024.

"We have an internal study which [shows that it] probably will take 10 years before the interest [subsidy] would need to rise," de Guzman added.

The DHSUD has asked Congress to give the agency an annual P36 billion budget to fund the interest subsidy last year, but this has not materialized.

Quimbo said that the P1.5 billion budget of interest subsidy covering 50,000 low cost housing units on an annual basis is already a heavy burden for the government.

"I asked because P1.5 billion is a huge amount, and we would need another P1.5 billion to build another 50,000 low cost housing units, and we would need this for every year for the next years," Quimbo said.

"You need to remember that your target is to build one million housing units every year," Quimbo added.

Under the Pabahay Program, each housing unit costs P1.2 million, with monthly amortization costing at least P3,500 per month. The government is mulling over making this monthly amortization a graduated rate starting at P2,000 which will increase after five years.

Of the P1.2 million unit cost, the beneficiary will only pay P400,000, a loan that they will pay in 30 years to state-run Home Development Mutual Fund with 6% annual interest. The beneficiary will only pay 1% of such interest, with the remaining 5% subsidized by the government. —VAL, GMA Integrated News