SMF repurchases BTN’s Rp 500b housing loans

State-owned secondary mortgage provider Sarana Multigriya Financial (SMF) signed a deal on Friday with state-owned publicly listed Bank Tabungan Negara on a repurchase agreement for housing loans worth Rp 500 billion (US$53.5 million).

BTN expects to spend the fresh money it wIll raise on providing more housing loans under the housing loan liquidity facility (FLPP), a government subsidized mortgage program for citizens who have never owned a house and earn less than Rp 3.5 million per month.

“The program makes it possible for us to finance more houses,” BTN president director Iqbal Latanro said in Jakarta after the signing. “This year, we are set to provide loans for 16,000 houses under the FLPP program.”

SMF will only repurchase BTN loans disbursed under the government scheme.

Under the scheme, BTN provides loans at a 7.25 percent interest rate for people to buy houses of less than 70 square meters. SMF will buy the loans from BTN at a rate of 7.85 percent.

For comparison, a Bank Indonesia announcement in March stated that BTN’s basic housing loan rate is set at 11.08 percent this year, while the lowest basic housing loan is offered at 7.5 percent by publicly listed Bank Central Asia, Indonesia’s third-largest lender.

Iqbal said BTN would cover the costs resulting from the rate disparities, but did not explain how.

The lender had provided loans for 2,500 house purchases under the scheme, as of the first quarter of this year.

Since 2011, SMF and BTN have undertaken mortgage repurchases with a total value of Rp 1.03 trillion. They also collaborated in four housing loan securitizations worth Rp 1.95 trillion in total.

“It is the first time we have repurchased mortgage with a 10-year tenure. Previously, we only bought loans with a five-year tenure,” said SMF president director Raharjo Adisusanto. (yps/mtq)