MANILA, July 2 (Reuters) - The Philippine central bank sees no need to adopt new rules on real estate lending in spite of strong demand as the risk of asset bubbles forming is low, but it will continue to monitor banks' exposure to the sector, Governor Amando Tetangco said.
A sell-off in financial markets triggered by concerns that the Federal Reserve's bond-buying policy would end sooner than expected has reduced the risk of asset price bubbles forming in the property market, Tetangco told reporters late on Monday.
The Bangko Sentral ng Pilipinas (BSP) had previously asked banks to submit more information on their property-related lending and investments on concerns that hot money inflows could fan housing inflation, especially for high-end properties.
The Philippines was the fastest-growing economy in the region in the first quarter boosted by domestic consumption and public spending. Improved credit ratings also put the country on the map for investors.
The Philippine property stock index rose more than 30 percent from January to mid-May this year.
'We are now analysing the reports and we will see if there is going to be a need to adopt measures. But at this point in time, we do not see the need for that,' Tetangco said.
He also said there remains a huge need for low-cost housing given a significant backlog of nearly 4 million units in that market segment, as well as continued demand in the medium-cost condominium housing market.
In May, the central bank released data suggesting that the non-performing real estate loan ratio for banks as a whole continued to be 'stable.' But it said it was considering changes to guidelines for real estate lending with evidence of a rise in real estate loans, although it described the increase as consistent with overall credit expansion..
In August last year, the central bank widened the definition of banks' property-linked lending activities to include debt and equity investments in real estate, among others.
Tetangco has said there was no need to deviate from the central bank's current monetary policy stance as the country's economic fundamentals remain solid, and with inflation projected to fall within this year's 3 to 5 percent target band.
The central bank kept the overnight borrowing rate steady at a record low of 3.5 percent and left the rate on its special deposit account (SDA) unchanged at its rates meeting on June 13. It next meets to review policy on July 25.
(Reporting by Karen Lema; Editing by Jacqueline Wong) Keywords: PHILIPPINES PROPERTY/LOANS
(email@example.com)(+632 841-8938)(Reuters Messaging: firstname.lastname@example.org)
Copyright Thomson Reuters 2013. All rights reserved.
The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.