L

enders have lamented a lack of positive effects following the relaxation of down-payment rules for property and automotive loans amid a lingering weak credit sector in the second half of the year.

Credit rules were relaxed in June with Bank Indonesia'€™s (BI) revision of loan-to-value (LTV) ratios for both property and automotive loans. Under the new rules, which were expected to trigger higher sales of houses, apartments, shop houses, cars and motorcycles, customers are required to pay smaller deposits.

'€œWeak purchasing power has prevented the LTV relaxation from having an impact,'€ Bank Danamon finance director Vera Eve Lim told The Jakarta Post recently.

Vera attributed the weak purchasing power to the plunge in global prices of minerals and natural resources.

Loan growth in Southeast Asia'€™s largest economy fell from 10.5 percent year-on-year (yoy) in June to 9.4 percent in July, based on BI data.

With a significant portion of its business contributed by auto-financing unit Adira Finance, Danamon'€™s lending contracted by 3 percent to Rp 136.3 trillion (US$9.6 billion) as of June this year, a decline from the Rp 140.64 trillion recorded in the same month last year.

Meanwhile, Bank Negara Indonesia (BNI) consumer banking director Anggoro Eko Cahyo said his bank was still expecting to see higher growth in the fourth quarter.

'€œWe have been offering flat interest rates for our mortgages with three-year tenure as we seek momentum from the LTV relaxation,'€ Anggoro said.

Separately, Bank Tabungan Negara (BTN) mortgage and consumer lending director Mansyur Nasution said that despite the LTV relaxation, his bank had yet to see any increase in housing loans over the past two months.

According to Mansyur, the lower down-payment requirement will only trigger a loan increase if the central bank follows it with another policy exempting any first house purchase from the LTV ratio ruling so that would-be buyers have stronger purchasing power.

Despite the lack of impact on housing and car loans, PermataBank economist Josua Pardede remained optimistic about the new LTV ruling.

'€œThis [weak loan growth] is in line with slow government spending. We hope to see some improvements in the second half thanks to infrastructure developments, which are essential for money circulation at the regional level,'€ Josua said.