Celiss: The Increase In Interest Tribes Influences People's Decree To Buy Houses

JAKARTA - Bank Indonesia (BI) has set an increase in the benchmark interest rate by 25 basis points (bps) to 5.75 percent. Responding to this, Economist and Director of the Center of Economic and Law Studies (Celios) Bhima Yudhistira said the policy would affect home demand.

"The effect of rising loan interest rates also affects the public's decision to purchase houses or mortgages, because more than 70 percent of the purchase of houses uses mortgage facilities. So, if the mortgage interest rate increases, the impact will be immediately felt on the request for houses or property," said Bhima when contacted by VOI, Friday, January 20.

Then, in terms of households, Bhima said the effect of increasing the benchmark interest rate would also affect the loan made by the community.

"Business actors are certainly not all ready to face additional loan costs, also affecting consumer or public decisions to purchase motorized vehicles," he said.

Therefore, Bhima assessed the need for mitigation from the government after the interest rate was raised in anticipation of the impacts that would emerge.

"So, there must be a mitigation policy from BI and the government to continue to encourage purchasing power and/or stimulate sectors that will be directly affected," he concluded.

For your information, the Board of Governors' Meeting (RDG) of Bank Indonesia (BI) decided to raise the BI 7-Day Reverse Repo Rate (BI7DRR) by 25 basis points to 5.75 percent for the January 2023 period.

With this increase, the deposit facility interest rate becomes five percent and the lending facility rate becomes 6.5 percent.

"The Board of Governors meeting decided to raise the BI 7-day reverse repo rate by 25 basis points," said Bank Indonesia Governor Perry Warjiyo in a virtual press conference, Thursday, January 19.