Bank Indonesia (BI) has once again relaxed the Loan to Value (LTV) policy or rules on home ownership Loans (KPR).

In the previous LTV regulation for first home purchase, BI stated that deposits for home purchase should equal 10 per cent of the house price. Now, the central bank has revised this stating that individual banks should decide deposit value. 

"So we have not set the amount of LTV for the first house, it is to be assessed by the risk management team of each banking institution," said Bank Indonesia Governor Perry Warjiyo in his office on Friday (29/06/2018).

Not only that, BI also simplifies the provision of LTV for home ownership. In the previous rule, the second home ownership required a deposit of 15 per cent and the third house required 20 per cent."

From now all purchases after the first home will be set at 15 per cent deposit.

He said the LTV policy easing is expected to boost the credit sector while maintaining the momentum of economic growth amid high global sentiment.

Warjiyo continued "Why? because if the property investments increase it will have an extraordinary effect on various sectors, including increasing demand for labour, building materials and so on. As a condition, banks that can apply this LTV leeway policy are, firstly, banks with non-performing loan (NPL) ratio of less than 5 per cent. Secondly, banks whose gross NPL ratio of NPLs is less than 5 per cent. 

"This policy will take effect on August 1, 2018," Warjiyo concluded.

Source: Liputan6

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