What are the Current Property Credit and Financing Facilities Available?

To encourage the banking sector's role in channeling property loans, Bank Indonesia (BI) plans to relax regulations on the Loan to Value (LTV) ratio for home ownership loans (KPR). This measure aims to boost property credit growth, thereby stimulating the domestic economy. However, banks have not fully utilized this relaxation, resulting in current property credit growth remaining below the 30% achieved during 2012-2013.

In 2016, Bank Indonesia issued Regulation No. 18/16/PBI/2016 concerning the Loan to Value (LTV) ratio for property loans, the Financing to Value (FTV) ratio for property financing, and down payments for motor vehicle loans and financing (PBI LTV/FTV). This regulation came into effect on August 29, 2016. For the first property loan facility for landed houses >70 square meters, the LTV is 85%, meaning a 15% down payment (DP). Subsequent loan facilities have LTVs of 80% and 75%, respectively.

According to BI data, property credit in March 2018 reached Rp 579.98 trillion, a 12.13% year-on-year (YoY) increase from March 2017. Non-performing property loans amounted to 2.65%. For KPR, the 22-70 square meter segment showed the highest growth, with landed houses and apartments recording increases of 17.85% and 42.53%, respectively.