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View all search results30-year mortgages may boost subsidized housing, but default risks loom
Analysts warned that many potential beneficiaries of subsidized housing programs work in the informal sector, with little job and income stability.
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New build: Construction workers erect permanent housing for disaster survivors on March 7 in Kampung Talang, Koto Tuo, Pauh, Padang, West Sumatra. (Antara/Fitra Yogi)
T
he government is in the process of extending the repayment period for subsidized home mortgages from around 10-20 years to up to 30 years, Public Housing and Settlements Minister Maruarar Sirait announced on Mar. 8. He said the move has received approval from President Prabowo Subianto in a bid to make housing more affordable for low-income households (MBR).
Industry groups and analysts have praised the move but warn that the government needs to develop supporting infrastructure to prevent defaults, as many MBR work in the informal sector with no stable income or job security.
According to Maruarar, a longer mortgage tenor would lower monthly installments and help the government meet its target of building 3 million houses a year.
Besides extending loan tenors, the government is also preparing additional measures to support housing development, including land provision and financing schemes involving multiple stakeholders.
Previously, the government provided several incentives for low-income property buyers, including exemptions from the land and building acquisition tax (BPHTB) and building approval fees (PBG).
In addition, a new financing scheme is being prepared for middle-income households, offering a fixed interest rate of 7 percent for the first 15 years.
Finance Minister Purbaya Yudhi Sadewa expressed support for the policy, saying the extension could help broaden access to housing finance. He added that lighter monthly payments could encourage banks to expand long-term mortgage lending.
