KPR Remains Primadona, Bank Anticipates Credit

JAKARTA - Even though property sales are down, People's Housing Credit (KPR) remains the prima donna for the community in realizing their dream of owning a dwelling. Interest rate factors are the main consideration of the community in choosing mortgages. Therefore, banks must find ways to meet people's demands for mortgages with competitive interest rates.

Property Observer Aleviery Akbar said any increase in interest rates would affect property sales. The impact of the increase in interest rates will affect mortgage demand and credit payments to banks from ongoing loans.

Meanwhile, in the midst of an increase in the benchmark interest rate of 25 basis points to 6 percent, macroprudential policies related to incentives to reduce the minimum mandatory giro or GWM will not directly affect consumer financing. The effect of this policy has more impact on financing for developers.

"The increase in interest rates will affect consumer credit sales and payments. Of course, with high interest rates, the risk borne by banks is the potential for a bad loan increase," he said.

According to the Bank Indonesia Property Price Survey (SHPR), residential property prices in the primary market on an annual basis are still continuing the upward trend in the second quarter of 2023. The Residential Property Price Index (IHPR) in the second quarter of 2023 recorded an increase of 1.92 percent (yoy), higher than the increase in the previous quarter which was 1.79 percent (yoy).

More specifically, the increase in the IHPR was mainly supported by an increase in the price of small-type houses by 2.22 percent (yoy), middle-type houses experienced an increase of 2.72 percent (yoy), and large-type houses with an increase of 1.49 percent (yoy).

Meanwhile, the sales rate of residential properties in the primary market in the second quarter of 2023 was still low on an annual basis, with a contraction of 12.30 percent (yoy), deeper than the contraction in the previous quarter which was 8.26 percent (yoy). One of them is caused by the mortgage interest rate. However, the type of financing that is the main choice for the community in purchasing primary houses is the mortgage.

Bank Indonesia noted that bank housing loans reached IDR 663.6 trillion in the first semester of 2023 or grew 10.1 percent YoY. KPR was recorded as contributing 35 percent to the total bank consumer loans which were recorded at IDR 1,895.3 trillion, an increase of 9.1 percent.

Meanwhile, the type of financing that is the main choice for the community in purchasing primary houses is the majority of KPR (76.02 percent), followed by the purchase of Cash in stages (17.25 percent), and the purchase of Cash (6.73 percent).

Boosting property sales, Bank Indonesia provides minimum mandatory demand reduction incentives or GWM of 0.5 percent if its lending grows 3-7 percent, and if it can afford more than 7 percent get a reduction of up to 0.6 percent, banks will take advantage of these incentives to more aggressively offer mortgages.

The Secured Business Head of PT Bank Danamon Indonesia Tbk, Yenny Frisca, said that his party understands the public's need for dream housing, but it is hindered by relatively high prices and interest rates. Banking still has to be careful in the midst of dynamic economic conditions.

He continued, Danamon's strategy to answer the community's need for housing is through the Danamon MORE mortgage. This solution combines loan products and savings. In addition to customers being able to plan to buy a house, this solution also offers financial management to help people achieve financial goals and meet their needs.

"KPR Danamon More is Danamon's commitment so that customers can have a dream home while still in control of their every goal and financial needs. They can save without being blocked from their balance to meet their daily needs, as well as accessing mortgages with competitive services, such as mortgage interest which can get smaller, even reaching equivalent to Rp0 and a faster repayment period," he said.