1. Market Survey Results and Implications for Product Design TRAINING WORKSHOP FOR BANKS INTERESTED IN OFFERING HOUSING MICROFINANCE

2. A.Respondent’s Profile B.Business Profile C.Home Ownership D.Housing Situationer E.Home Improvements for the Past and Next 2 years F.Potential Demand for HMF G.Loan and Savings Experience with the Bank

3. Total Number of Respondents:100 Period of Survey:2010 March 15 - April 15 Location of Survey:Municipalities of X and Y 12 barangays Table on Distribution of Respondents Number% Microfinance Client3838% Salary Loan Client0 Depositor3030% Non-client/New3232% No response0 Total100100%

5. 88.10% of the respondents are interested to get a loan for housing purposes POINTS TO CONSIDER Given the data gathered, is there a demand for HMF? POINTS TO CONSIDER Is the demand manifested in past and planned home improvements? Table on Past and Planned Home Improvements, in Percent Past YearNext 2 Years With Home Improvements 59.60%84.85%

6. Sources of Majority of Funds for Past Home Improvements POINTS TO CONSIDER Where did the majority of funds for past improvements come from?

7. Of the 38 respondents who received a loan from the RB in the last 2 years, 33.33% used a part of these for housing purposes. % of loan amount used for the purpose cited: minimum of 2% maximum of 100% and median of 60% POINTS TO CONSIDER Is there a demand from existing borrowers?

9. Table on Types of Past and Planned Home Improvements (multiple answers) ImprovementsPast YearNext 2 Years Extra room for household purposes932 Extra room to rent or backyard room109 Extra room or space for business815 Build a kitchen or improve finishes2031 Build a bathroom or improve1123 Improve or put on a roof/ceiling1538 Improve or put in a floor1527 Paint, plaster or wall paint1535 Windows1021 Doors824 Connections to an outside water line29 Internal water/ plumping installation212 Internal electricity/ outlet installation26 Add wall or fence around property511 POINTS TO CONSIDER What are their past and planned house improvements?

10. Housing Situationer: Majority of houses age more than 15 years (47.47%) Respondents and their families lived in their house for more than 15 years too (55.56%) 71.72% have two or more bedrooms in their house 67.68% owns both toilet/bath and kitchen while 19.19% owns either a toilet/bath or a kitchen Houses made from stable materials -Roof: corrugated iron 79.8% -Floor: concrete 56.57% -Walls: Concrete 47.47% Piped water inside the house 56.57% Electricity from formal power line connection 89.90% POINTS TO CONSIDER Given their house situationer, what are the probable improvements?

12. Table on Preferred Loan Amount Term and Amortization POINTS TO CONSIDER What will be the range of loan amount and term? How should bank configure terms relative to size of loan and amortization? Product FeaturesMaximumMinimumAverageMedian Loan AmountP1,000,000P5,000P153,250P50,000 Loan Term36 mos.4 mos.14 mos.24 mos. Monthly AmortizationP9,000P0P2,150P1,800 MaximumMinimumAverageMedian Cost of improvementP500,000P1,000P74,292P20,000 Table on Cost of Improvements in the Past Year

13. POINTS TO CONSIDER Basing on how much each of this improvement will cost, what will be the loan amount range? Table on Types of Past and Planned Home Improvements (multiple answers) ImprovementsPast YearNext 2 Years Extra room for household purposes932 Extra room to rent or backyard room109 Extra room or space for business815 Build a kitchen or improve finishes2031 Build a bathroom or improve1123 Improve or put on a roof/ceiling1538 Improve or put in a floor1527 Paint, plaster or wall paint1535 Windows1021 Doors824 Connections to an outside water line29 Internal water/ plumping installation212 Internal electricity/ outlet installation26 Add wall or fence around property511

15. Table on Distribution of Respondents POINTS TO CONSIDER Who are the target market of the bank’s HMF? Existing clients? Borrowers and/or Depositors? Microfinance and/or Regular Loan borrowers? What are the risks involved in offering the product to each market? Number% Microfinance Client3838% Salary Loan Client0 Depositor3030% Non-client/New3232% No response0 Total100100%

16. Age ranges from 21 to 70, median of 45 Predominantly female (86%) Majority married (89%) POINTS TO CONSIDER What age range will be eligible to apply for a loan? Should the bank offer the product to both male and female? Will the bank consider the applicant’s civil status? Majority of houses age more than 15 years (47.47%) Respondents and their families lived in their house for more than 15 years too (55.56%) Own the house 88%, -with title 48%, -Hired builder 78% -owned lot 68% POINTS TO CONSIDER What will be the residency requirement, if any?

17. Most businesses are engaged in trade (81%) For those employed, most private (42%) Table on Regular Sources of Household Income N% Distr. Business Income9161% Respondent’s Salary1711% Spouse’s Salary from within the Phils.2617% Remittance within the Phils.85% Remittance from abroad53% Others: Rent/ Pension32% POINTS TO CONSIDER Should the bank offer the product to entrepreneurs or salaried employees?

18. 42% businesses are registered Chart on Growth of Business Profits over the Past 12 Months POINTS TO CONSIDER Exclude or include those without permit in eligible borrowers? Why? What are the risks here?

20. Table on Types of Available Loan Collateral (multiple answer) POINTS TO CONSIDER What types of collateral will the bank require? At what loan amount should the bank require which collateral? N% Distr. Building/Home2119% Land/Lot3028% Machinery76% Salary109% Bank Account22% Serialized Assets2321% Jewelry22% Guarantors/Co-Makers1110% Vehicle33% Total109100%

22. Table on Preferred Months to Make House Improvements They are most likely to make these improvements on March, July and December; while 4% remains undecided MonthsNumber%MonthsNumber% January00%July2533% February00%August00% March1419%September00% April79%October00% May79%November00% June79%December1216% POINTS TO CONSIDER What month does the bank expect higher demand?

24. With those who have planned improvements, only 10% have savings POINTS TO CONSIDER Should bank integrate contractual savings in the loan product design? What will be the policy on withdrawal? Can the RB see an opportunity in this deposit market? Should the RB design a goal-related (housing) savings product? What basic features could be included? While 19% have been saving building materials Savings for Planned House Improvement MaximumMinimumAverageMedian Amount of SavingsP100,000P3,000P29,000P10,000

26. Table on Savings Deposits with Banks Currently have a deposit account with…Rural BankOther Financial Inst. Yes98%23% No2%77% No response0% POINTS TO CONSIDER Given the data above, what are the opportunities of the RB in the deposit market? Do depositors prefer the RB over other financial institution? Why? What is the RB’s competitive edge over other financial institutions?

27. Table on Usual Source of Credit, besides the RB Credit Sources% NGO (foundation)1% Cooperative9% Lending Investor9% Commercial Bank23% 5-6 (Bombay, turko)15% Friends, Neighbors19% Relatives23% Others1% POINTS TO CONSIDER What are the products and terms/conditions offered by other creditors? How should the bank target those afraid/shy to borrow from a bank? What marketing activities/campaigns should bank undertake to increase awareness of bank and its loan products?