High interest rates in RP.

[willvill]

I've seen in the media that interest rates in Japan as pegged by their central banks is less than 1% per annum. This extremely low rate is meant to help Japan pull out of its economic downturn. UK too has just 1.5%. US is just a hair higher.

The Philippine Central Bank announced a 1/2 % reduction in their lending rates recently. Is this peanuts? You bet.

My latest commercial loan from my bank, shows I'm charge with 12% p.a. Miles away from the rates in Japan and elsewhere.

Why do we have extremely high interest rates as compared to the developed countries I mentioned above?

Could this high interest be one of the reasons why our economy is lagging down and not growing as fast as we want to?

[Pacis]

Oo nga eh, pero I don't know how governments compute interest rates.

Dito sa US, I just took out a car loan last year, 3 years * 4%pa. Imagine that, compare mo sa 20-30% sa Pinas for 3-4 years na car loan.

[uls]

iba naman sa States eh

they are fighting a recession

more like fighting deflation

kaya the Fed lowered rates to zero

wala naman recession dito sa Pinas

and we just came from double digit inflation last year

nagtaas ng rates ang bangko sentral to fight inflation

di pwede mag lower ng rates sobra dito

hihina sobra ang peso

Japan is also fighting recession, and years of stagnation

the UK is also fighting recession

[CVT]

Sabi ko na nga ba that the Philippines is in a better position these days than these countries....

7303:soda:

[Pacis]

iba naman sa States eh

they are fighting a recession

more like fighting deflation

kaya the Fed lowered rates to zero

wala naman recession dito sa Pinas

and we just came from double digit inflation last year

nagtaas ng rates ang bangko sentral to fight inflation

di pwede mag lower ng rates sobra dito

hihina sobra ang peso

Japan is also fighting recession, and years of stagnation

the UK is also fighting recession

Actually, maraming klase ng rates na inaadjust ang Feds, merong Fed Fund rate, merong Prime rate and Subprime rate.

When I took out the car loan in April 2008, hindi pa maugong ang recession. Today halos doble na ang rates even if you have good credit. Dahil sa recession mas tumaas ang lending rates kasi nabawasan na ang mga gustong magpautang. Everybody wants to be liquid.

IMHO, kaya mataas ang interest rates sa Pinas kasi mas kaunti ang gustong magpautang. Also, mas mataas malamang ang default rate sa mga loans dahil hindi naman well established ang credit checks tulad sa ibang bansa. Dito sa US you just give your SS # alam na nila lahat. Sa Pinas sang damakmak na documents ang kailangan to do a CI.

[uls]

^^^

the Fed started lowering the fed funds rate Sept 2007 in response to the subprime mortgage crisis

by april 2008, the fed had already cut rates a number of times (i'm too lazy now to check the exact number of times, but i'm sure it was more than twice, 3 or 4 times)

and in april 2008, banks are still lending (that's why you were able to get a car loan easily, and at low rates)

the only major casualty at that time was Bear Stearns

there wasnt much panic at that time

try getting a car loan post-Lehman failure (Sept 2008 onwards)

[uls]

Sabi ko na nga ba that the Philippines is in a better position these days than these countries....

7303:soda:

yes the Phils. is actually doing better than other asian countries

we're not experiencing dramatic economic slowdown like what's happening in Japan, Taiwan, China, S.Korea

our economy relies more on domestic consumption

di tulad nila they rely on the consumption of developed countries

yun nga lang our domestic consumption relies on OFW remittances

basta tuloy tuloy ang remittances, we'll be ok

[Pacis]

^^^

the Fed started lowering the fed funds rate Sept 2007 in response to the subprime mortgage crisis

by april 2008, the fed had already cut rates a number of times (i'm too lazy now to check the exact number of times, but i'm sure it was more than twice, 3 or 4 times)

and in april 2008, banks are still lending (that's why you were able to get a car loan easily, and at low rates)

the only major casualty at that time was Bear Stearns

there wasnt much panic at that time

try getting a car loan post-Lehman failure (Sept 2008 onwards)

like I said maraming iba't ibang klaseng rates na inaadjust ng Feds, hindi lang yan isa. Yung funds rate interbank loaning rates yan, different yan sa lending rates like prime na for people with good credit and iba pa rin yung subprime which is for people with bad credit.

nung kumuha ako ng car loan, hindi lang dahil sa bago pa ito ng recession kaya i got it easily and at a low rate. i also had good credit which is the main factor

ang car loan rates ngayong recession, nasa 7% tumaas lang ng 3%. hindi naman nila pwede taasan yan ng sobra sobra dahil kailangan nila makabenta ng kotse, kaya nga nila iniistimulate ang economy para bumili ang mga tao

just do the math sa 700,000php na kotse, (around 15k$) pag niloan mo sa US ito (36mos), total na interes na babayaran mo sa life ng loan is around $950, wala pang 47,000 pesos. yung huling kotse na niloan ko sa pinas na halos same amount umabot ng 1M

[uls]

alam ko po iba ang fed funds rate sa interest rates ng mga bangko sa consumers

ang point ko, pag nilower ng Fed ang rates para sa mga bangko, the banks can pass lower rates to consumers

and that's the goal of the Fed -- cutting rates to make banks lend, to stimulate the economy

kaya nagtaas ng rates ang mga bangko ngayon recession kasi tingin ng mga bangko ngayon sa mga borrowers puro high risk kasi pwede mawalan ng trabaho ang mga borrowers

--

yung ikinatutuwa ng mga US consumers -- the low rates and easy borrowing -- yan ang nagpabagsak sa mga bangko

kahit sino pinautang, kahit yung mga walang kakayahan magbayad ng utang pinautang

ayan... bine-bail out tuloy ng mga US consumers/taxpayers ang mga bangko na pinabagsak nila

so ano po exactly ang naging benefits ng low rates and easy borrowing?

yung future income ng mga US consumers/taxpayers ginagastos ngayon ng gobyerno sa pagtulong sa mga bangko (kahit hindi bangko tinutulungan)

---

buti pa dito... strict ang mga bangko, di nagpapautang kahit kanino

tama ang ginagawa ng mga bangko dito

[uls]

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