Bank Indonesia to relax loan-to-value ratio

  • Bank Indonesia (BI) will soon announce a relaxation on the loan-to-value (LTV) ratio in trying to boost sales in properties through a mortgage program.
  • The relaxation plan is related to the decline of the down payment ratio, mortgage indent regulation relaxation and the credit payment term.
  • BI Governor Perry Warjiyo said recently the central bank would still consider prudent principles in loan distribution and banking risk management in the issuance of new regulation on the LTV ratio relaxation.
  • He said the relaxation policy was expected to give wider room for banks to disburse funds through a mortgage program.
  • PT China Construction Bank Indonesia (CCB Indonesia) director Setiawati Samahita welcomed the policy, saying it would certainly be good for the property business.
  • She said the policy would boost transactions in property businesses, whose domino effect would trigger higher economic growth in the country.
  • Junianto, another CCB Indonesia director, said they expected LTV to be applied differently in each segment of properties — houses, apartments and ruko (shophouses). He stressed the bank would still maintain the prudent principles in distributing the loan to customers, although BI would relax the LTV ratio.

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