THE NEW MORTGAGE DOWN PAYMENT REGULATION

Bank Indonesia’s regulation that stipulated minimum down payment for mortgage at 40% for second house and 50% for third house was rated as troubling the people in obtaining houses. The Director of Communication Department of BI Peter Jacobs stated in Jakarta on Monday [18/11] that the new regulation for mortgage for second and third house was already effective per September 30, 2013 and applicable for conventional and Syariah banks.

The rules were written in BI circular letter No. 15/40/DKMP dated September 24, 2013 on the application of risk management on banks which extended credit. According to Petter, the policy was basically designed to maintain stability of financial system and to strengthen bank’s resilience. The effort was done by way of reducing credit risk in the property sector.

The regulation was also meant to allow more opportunity for the middle and lower income group to own decent homes and at the same time ensure consumer’s protection in the property sector. This rule was not applicable to credit or financing within the housing program of the central or original Government.

Meanwhile BI reported the people who benefited from the house financing liquidity facility [FLPP] or subsidized KPR by the Government, as per January-September 2013 was only 5.75%of total mortgage. As known, financing by FLPP was meant for the low income group whereby to be entitled to mortgage installment of 7,25% with maximum tenure of 20 years. The type of home in this plan were homes measuring 21m2 – 36 m2based on maximum price in effect in accordance with the regulation of the Ministry of People’s Homes.

The liquidation of FLPP fund to Q III/2013was 56.07% of the Rp7.34 trillion fund targeted for 2013 and unabsorbed fund of 2012. Data of BI showed that the amount was regarded a sufficient for buying 350,000 homes. So far, only around 12,800 unit of homes were channeled through FLPP.

BI noted that price of small type of homes was continuing to increase since end of 2012. By yearly basis, compared to medium size homes [36 m2 – 70 m2] the increase was 12.81% and big homes [> 70 m2] was posted at 9.72%. This small type homes was seen to increase price wise by 18.49% on the average over the past year. By area, price of small type of houses were showing highest increase in Jabodetabek-Banten, i.e by 23.53%. These houses measuring up to 36 m2 were posting sales increase up to 43.68% against previous quarter with highest sales posted at Jabodetabek. [80%].

Use of KPR mortgage slumped in Q II 2013 against previous quarter by 76.46%. BI survey concluded that most consumers [75.45%] used KPR and KPA facilities to buy houses ; this was related to interest level offered by company banks between 9% and 12%. The number of customers buying property by gradual cash was 14.23% and hard cash 10.32%.

To benefit KPR by consumers made KPR chanelling through quarter II 2013 to reach Rp 259.01 trillion or growing by 12.33%, higher than total credit of the banking sector at 7.10%. Of the total KPR extended by banks since January to June 2013, 4.13% were using FLPP of Government and the rest [95.87%] used regular KPR. 

Business News - November 22, 2013