Despite the common perception that millennials are more interested in traveling than owning their own properties, a recent survey from Alvara Research Center reveals that 54.2 percent of Indonesia’s millennials prioritize owning a house or apartment to live in.

However, with skyrocketing property prices, those aged between 20 and 35 years old will be unable to buy a house with their own money. At least a third of the country’s millennials surveyed by the center received financial assistance from their parents to buy a house.

To cater to this generation’s need for housing and mortgages, financial institutions such as banks and financial technology (fintech) firms are creating innovative lending options that can fit their income and lifestyle.

Last year, state-owned lenders Bank Mandiri and Bank Tabungan Negara (BTN) launched millennial-focused mortgage loan products. These financing options offer more flexible down payment requirements and loan ceilings so that customers could adjust their installments to their income level over the years.

Similarly, private lender Bank Central Asia (BCA) also set progressive loan installments, in which the amount of the monthly payment can be adjusted every year depending on the borrower’s earnings. The installment will be increased if the salary is higher.

BCA’s executive vice president of consumer credit Felicia M. Simon said on Oct. 7 that such a financing option was offered to enable millennials and first jobbers to own their own homes.

“The financing feature lets first jobbers pay their loan installments depending on their earnings,” she told the press in Jakarta. “The loan installments will increase as their income increases over the years.”

Peer-to-peer fintech firms also jumped on the bandwagon in providing home loans for millennials. One of them is Gradana, which provides financing to buy or rent houses.

Cofounder Angela Oetama said on Thursday that the platform enabled borrowers to apply for loans through an online platform.

“We also provide loans to pay the down payment for house purchases, as well as for rental and renovation financing options that have never been provided by banks,” Angela explained on Thursday in Jakarta.

However, the loan facility is limited to the financing of houses built by developers that partnered up with the firm, she said.

As the Financial Services Authority (OJK) allows online lending platforms to disburse loans of up to Rp 2 billion (US$141,424), Angela said the platform could also provide home loans for the middle class.

Although peer-to-peer lending firms might have a reputation for granting almost every loan application, Angela admitted Gradana had rejected a few applications it deemed unfit, to prevent the risk of default from the borrowers.

As a result, the platform’s nonperforming financing has remained at 0 percent since its establishment in 2017 and it disbursed $2 million in loans in September this year.

The presence of Gradana and other fintech firms that offer mortgage loans could be seen as a threat by the banking industry, but economist Aviliani said both institutions could collaborate to reach a wider customer base, especially for millennials in the informal sectors who often struggled to get home loans.

“Banks could utilize fintech’s credit scoring ability to reach people working in the informal sectors, while banks could provide the necessary funding and let the fintech firms channel them to a wider customer base,” she said.

Deputy Finance Minister Mardiasmo also said the collaboration should also extend to the government, regulators and the real sectors to ensure the availability, affordability, accessibility and sustainability of the property industry in the country.

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