The Philippines may further limit property loans to prevent a housing bubble as it uses lower interest rates rather than capital controls to deter inflows. "We plan to reference real estate exposure to adjusted capital of banks," Philippines Central Bank governor Amando Tetangco said, but added that capital controls were not being considered at the moment. The Philippines has cut borrowing costs, banned foreign funds from special deposit accounts and eased rules for outflows, striving to manage an investment influx lured by economic growth exceeding 6 per cent and improved credit ratings. Cheaper loans stoked an 18.9 per cent climb in property lending and investment to a record 561.6 billion pesos (HK$106.3 billion) in the first half of this year central bank data shows. "We observe that financing terms are getting more and more attractive, so we'd like to closely monitor this," Tetangco said. While there are no signs of bubbles in the low and middle segments of real estate, "strong supply can outstrip demand eventually" in the high-end housing market, he said. The Philippine Stock Exchange Index climbed 1.7 per cent to a record 7,215.35 on May 3, the day after Standard & Poor's raised the nation's sovereign rating to investment grade, following a similar step by Fitch Ratings in March. The peso closed at 40.903 per dollar, the strongest level in a month. President Benigno Aquino is fighting graft and tax evasion to contain the budget deficit, increasing spending to a record and seeking more than US$17 billion of infrastructure investment to spur growth to as much as 7 per cent this year. The US$225 billion economy expanded 6.6 per cent last year, one of the fastest rates in Asia. Bangko Sentral last month cut the rate it pays on special deposit accounts for a third time this year to 2 per cent, while keeping the benchmark rate at a record-low 3.5 per cent. The central bank is considering "refinements" to the so-called SDA, Tetangco said. Real estate lending by banks is capped at 20 per cent of total outstanding loans, with some exclusions. Rising prices have spurred developers including Ayala Land to build more homes. Nations such as the Philippines, Thailand and South Korea have signalled concern that currency gains threaten to hurt export competitiveness. The peso has appreciated about 3 per cent in the past 12 months, the best performance after the Thai baht in a basket of 11 Asian currencies tracked by Bloomberg.