Bank Indonesia (BI) plans to roll out a new regulation on mortgages later this month in a move to help ease property speculation and reduce fraud.
The regulation will control additional house purchases, namely the purchasing of second, third or more homes, according to BI Governor Agus Martowardojo.
“We have seen an increase in the property segment for multiple house purchases and that is what we are trying to control. We want to maintain healthy mortgage disbursements,” he said at the House of Representatives on Monday.
If everything goes as planned, this will be the second time BI has introduced a regulation on mort-
gages after a similar rule was unveiled in March 2012. Last year, BI set a minimum down payment at 30 percent of a house’s value, regardless of whether it was a buyer’s first home or an additional home.
Under the new rule, the central bank will increase the down payment for purchases of additional houses beyond a first home. BI will also stipulate that the loan funds for additional homes will only be disbursed if the property has already been constructed, as opposed to paying for off-plan properties where only an intent to build exists.
That way, Agus said, the allocated funds would be used to finance completed properties, reducing the risk of property fraud and speculation.
The central bank will amend its regulation on first-time purchases to ensure that funds are disbursed according to the house’s construction progress.
“Customers can still order off-plan properties, but the loans will only be disbursed in phases. Say construction has reached 50 percent, then the amount of funds to be disbursed cannot exceed 50 percent,” Agus said.
Meanwhile, the latest BI data shows that as of June 2013, the amount of outstanding loans disbursed by commercial banks for private home ownership stood at Rp 248.7 trillion (US$21.72 billion), up 16.5 percent from a year ago.
Contacted separately, Indrastomo Nugroho, the vice president for consumer and retail lending at Bank Negara Indonesia (BNI), said on Tuesday that the regulation was unlikely to impact the bank’s mortgage segment, as loans for additional homes accounted for less than 10 percent of its total mortgage business.
As of August 2013, BNI’s outstanding mortgages reached Rp 30 trillion. It has forecast a figure of between Rp 32.5 trillion and Rp 33 trillion in total outstanding loans by year-end, 30 to 32 percent higher than in 2012.
Henry Koenaifi, Bank Central Asia’s (BCA) managing director, said the bank welcomed the plan. “Most of our mortgage customers are in long-term contracts, between eight and 10 years. So, we can be certain that they are purchasing the houses for their personal use and not for investment,” he said.
BCA has set its mortgage growth rate target at 20 percent this year. With this target, the bank is estimated to book Rp 50.16 trillion in outstanding mortgages. The rate is far lower than the 49.1 percent recorded in 2012.
Meanwhile, Bank Jabar Banten’s mortgage head, Fermiyanti, questioned the central bank’s plan to forbid customers from pre-ordering off-plan homes for additional house purchases. “Is there some analysis that says that pre-order customers will fail to pay their installments? I’m afraid this [the plan] will hamper economic growth, as the economy is also fed by the property sector,” she said.
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