The Bangko Sentral ng Pilipinas’ (BSP) unexpected decision on Oct. 9 to slash key policy rates to 4.75 percent is expected to fuel stronger consumer credit activity in the fourth quarter, according to credit insights company TransUnion Philippines.
TransUnion anticipates that the fourth rate cut this year, coinciding with the peak retail and remittance season from September to December, would drive increased spending.
It said the low borrowing cost environment is likely to boost consumer demand for loans, including credit cards, personal loans and buy now, pay later products as well as increase average spending for consumer products.
Despite the anticipated rise in borrowing, TransUnion forecasts that delinquencies will remain stable or slightly improve.
This is attributed to the continuous growth in remittance inflows, which enhances borrowers’ repayment capacity.
“It’s a timely boost for consumers preparing for the holidays and for lenders aiming to meet that demand,” said Peter Faulhaber, president and chief executive of TransUnion Philippines.
Faulhaber cited the need for the financial industry to capitalize on this momentum by adopting first-mover strategies, delivering personalized offerings and implementing proactive risk management.
He also stressed the importance of encouraging responsible borrowing to help Filipinos manage credit wisely for the long term.
