Bank Indonesia eases LTV ratio ruling to boost property loan growth

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JAKARTA (TheInsiderStories) – Bank Indonesia on Thursday issued a ruling to ease loan to value (LTV) ratio and fianncing to value (FTV) ratio aiming at boosting property loan growth.

The decision was issued at the same time the central bank slashed benchmark BI rate by further 25 basis points to 6.50 percent. The decision was the fourth cut so far this year, pushing down the BI rate from 7.50 percent at end of December last year.

The central bank eased the LTV ratio for the purchase of a house through the house ownership credit scheme.

The decision is expected not only boost credit growth, in particular the property sector, but also boost overall economic activity in Indonesia.

In the first quarter of 2016, banks credit grew by 8.71 percent from the same quarter last year, which is a low growth pace for the country that had become used to double-digit figures.

The LTV ratio is eased for the purchase of landed house, flats, ruko (shop-house), the central bank said.

Executive Director for Monetary and Economic Policy of BI Juda Agung said the easing macro-prudential policy was given to trigger other industries that related with property.

“Easing the macro-prudential policies is expected to stimulate demand for properties. Since property is a leading sector, the policy is expected to help boost the economy as the sector will have spill over to other sectors such as construction, industry, mining and services,” Juda said.

As a consequence of the easing LTV and FTV ratios, consumers can provide lower down payment, from 20 percent to 15 percent. (*)

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Source: The Insiderstories
Bank Indonesia eases LTV ratio ruling to boost property loan growth

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