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Jakarta Post

BI policy to boost weak demand hinges on consumer, bank appetites

  • Dzulfiqar Fathur Rahman

    The Jakarta Post

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Jakarta   /   Mon, February 22, 2021   /  11:09 am
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Illustration of a housing complex.(Shutterstock/karelnoppe)

The latest move by Bank Indonesia (BI) to relax down-payment regulations to boost property and automotive sales will hinge on the appetites of consumers and banks, with the former facing much-reduced purchasing power as a result of the coronavirus pandemic. BI Governor Perry Warjiyo announced on Thursday that the central bank would relax the regulations to allow zero percent down payments for both mortgages and automotive loans to boost demand in both sectors, which have been battered by the COVID-19-induced downturn. The central bank has relaxed the loan-to-value (LTV) and financing-to-value (FTV) ratios, the ratios between the loan and the asset value, to 100 percent, from the previous 85 to 95 percent depending on property type. The LTV is an often-used ratio in mortgage lending to determine the size of down payment required and whether a lender will extend credit to a borrower....