JAKARTA (TheInsiderStories) - Bank Indonesia (BI) has eased the loan-to-value (LTV) ratio requirement for houses larger than 70 square meters by lowering the minimum down payment required for first home purchases using credit from 20 percent to 15 percent.
In the press statement released on August 30, minimum down payment for a second home was lowered to 20 percent from 30 percent, while that for a third home was lowered to 25 percent from 40 percent.
The lowering of down payment rule (PBI PBI No. 18/16/PBI/2016 on Loan to Value Ratio) also applies for motorcycle loans.
“The move is aimed to stimulate banks to improve their intermediary roles, while maintaining the prudential principle and protection of consumers.
The rule is effective from August 29, 2016.
Tirta Segara, executive director of Bank Indonesia, said there four amendments of the ruling. The first is changing of ratio and tier system for property credit (KP) and property financing (PP) for first, second, third facilities and more.
The second changing is an adjustment to the non-performing loan (NPL) requirement or non performance facilities (NPF) for LTV ratio of KP and FTP ratio of PP, from gross to net.
The ratio of NPL or NPF out of loan or financing is less than 5 percent, while ratio of gross NPL and gross NPF out of total loan or financing is less than 5 percent.
The third changing is additional loan or tup up loan by commercial bank and new financing by syariah bank or syariah unit, which is an additional financing is calculated based on the same LTP KP ratio or FTV PP ratio, so long the status of KP and PP is still current.
The fourth change is that KP or PP for property which is not yet fully available may be given to the second tier facility, and the withdrawal of the loan can be done in stages.
“It is hoped that the change can stimulate improvement of bank intermediary role in order to boost domestic demand and ultimately stimulate national economic growth,” BI said in a statement.
Following is the table of the changes of the rule in Indonesian language:
