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tate-owned secondary mortgage provider, Sarana Multigriya Financial (SMF), has agreed to repurchase housing loans worth Rp 500 billion (US$53.5 million) from publicly listed Bank Tabungan Negara (BTN).

“It is the first time that we will repurchase mortgages with 10-year tenures. Previously, we only bought loans with five years left on them,” said SMF president director, Raharjo Adisusanto, in Jakarta after the signing ceremony.

SMF repurchased BTN loans that had been disbursed under the housing loan liquidity facility (FLPP), a government-subsidized mortgage program for citizens with incomes lower than Rp 3.5 million per month and who don’t yet own a house.

Under the scheme, BTN provides loans with an interest rate of 7.25 percent to procure houses with a total area of under 70 square meters. However, SMF bought the loans at 7.85 percent interest.

Despite the interest-rate disparity, BTN’s president director, Iqbal Latanro, said the repurchases would allow the lender to channel more housing loans this year.

“There is a possibility to use derived funds to finance more houses under the program. This year, we are set to provide loans for 16,000 homes under the FLPP program,” he said.

As of the first quarter of this year, the lender had channeled loans for 2,500 house purchases under the scheme.

Since 2011, SMF and BTN have conducted 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.