Redefining borrowing habits of Filipinos

BORROWING IN Filipino households often followed a similar script: a neighbor knocking to ask for a small loan, a relative extending help, or a sari-sari store owner keeping a handwritten list of unpaid balances.

- Mhicole A. Moral

The practice of "utang" has long been rooted in trust and survival, and debt has not been treated as a last resort but as part of daily life. When income falls short, borrowing usually fills the gap. Such arrangement has been reinforced across generations, especially as saving is difficult and access to formal credit remains uneven.

Now, this pattern is starting to change for Filipinos.

The Institute of International Finance reported that the debt ratio among Filipino households eased to 11% in the fourth quarter of 2025, from 11.6% a year ago. Lending activity remains steady, according to the Bangko Sentral ng Pilipinas (BSP), with household loans rising from 23.3% to 28.4%.

A fourth-quarter 2025 Consumer Pulse Study by TransUnion also found that borrowing decisions have become more intentional, with consumers showing greater scrutiny before taking on debt. Intent to apply for or refinance credit fell to 47% from 53% a year earlier.

Instead, Filipinos now lean toward specific and controlled credit options. Personal loans accounted for 49% of planned borrowing, while buy now, pay later (BNPL) services made up 35%. These products often come with defined terms and shorter repayment periods, which may help borrowers plan their finances more closely.

The same report noted that 58% of Filipinos still view access to credit as important to achieving financial goals, but this figure marks a slight decline from the previous year. The change points to a change in mindset, with credit remaining relevant, but not as the first solution to financial pressure.

DEEP ROOTS OF BORROWING CULTURE

According to the Financial Executives Institute of the Philippines, borrowing is often normalized in Filipino society, where financial support flows through family and community networks. The concept of "utang na loob," or a sense of obligation tied to borrowed help, reinforces this system.