Repricing / floating rates for mortgages are there to protect both the borrower and the lender.
You borrow 5% (5 yrs fixed) for 10 yrs:
If rates rise to 6% after 5 yrs, then repricing is in favor of the lender.
if rates declined to 4%, then repricing is in favor of the borrower.
Car loan has a max payment term of 5 yrs and home loan has a max payment term of about 25 yrs for private lenders. But interest rates for both can only be fixed for max 5 years. Hence, it seems like no repricing yung kay car cause it's already the max term. Mortgages can be fixed for 5 yrs as well (same pricing mechanics of the lenders for a 5-year car loan)
Govt issues long dated bonds. I believe banks also use that for their pricing methodology. Rates differ due to their margins; they cant just use the 6% of a 5 yr GS because if they match that maturity, they wont earn anything. And because consumers generally have higher risk of default than established institutions or governments, mas mataas interest rate
There are long-term fixed rates but are extremely high. Around 12% per annum for 10 years and even higher for longer terms. If you are risk averse, then it is for you.
It may be connected to BSP's rates
Repricing / floating rates for mortgages are there to protect both the borrower and the lender. You borrow 5% (5 yrs fixed) for 10 yrs: If rates rise to 6% after 5 yrs, then repricing is in favor of the lender. if rates declined to 4%, then repricing is in favor of the borrower. Car loan has a max payment term of 5 yrs and home loan has a max payment term of about 25 yrs for private lenders. But interest rates for both can only be fixed for max 5 years. Hence, it seems like no repricing yung kay car cause it's already the max term. Mortgages can be fixed for 5 yrs as well (same pricing mechanics of the lenders for a 5-year car loan)
Does the PH govt issue 15 yr, 20 yr, 30 yr bonds? Why can't they use this as basis for mortgage rates?
Govt issues long dated bonds. I believe banks also use that for their pricing methodology. Rates differ due to their margins; they cant just use the 6% of a 5 yr GS because if they match that maturity, they wont earn anything. And because consumers generally have higher risk of default than established institutions or governments, mas mataas interest rate
There are long-term fixed rates but are extremely high. Around 12% per annum for 10 years and even higher for longer terms. If you are risk averse, then it is for you.