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How to stimulate property sector through LTV relaxation
The policy is expected to stimulate the property sector, which has the potential to grow and have a significant multiplier effect on the national economy.
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The property sector currently has the potential to grow and have a significant multiplier effect on the national economy. (Shutterstock/File)
B
ank Indonesia (BI) announced recently the relaxation of the loan-to-value (LTV) ratio imposed on conventional banks and the financing-to-value (FTV) ratio imposed on sharia banks in a bid to maintain momentum in the country’s economic recovery.
The macroprudential policy, which was launched immediately after the central bank raised its benchmark interest rate by 50 basis points (bps) to 5.25 percent, is expected to stimulate the property sector, which currently has the potential to grow and have a significant multiplier effect on the national economy.
Moreover, one of the main objectives of the LTV and FTV regulatory relaxation is to provide first-time buyers with more opportunities to fulfill their housing needs through a housing loan.
The policy includes the adjustment of the LTV ratio for conventional banks’ property loans and the FTV ratio for sharia banks’ property financing. The LTV and FTV rates will be left to each bank’s risk management, which will deal with loan facilities for all types of houses and apartments for first-time buyers.
