Bank Indonesia (BI) predicts a relaxation loan to value (LTV) policy can contribute 0.04% to gross domestic product (GDP) until the end of the year. Meanwhile, the government is targeting for 2018 economic growth to reach 5.4%.

“This LTV leeway can contribute as much as 0.04% to GDP,” said Assistant Governor Head of Makroprudential Policies Department Filianingsih Hendarta to the media when found in the BI Building, Jakarta, Monday (2/7/2018).

Furthermore, Filianingsih also mentioned, until December 2018, with this LTV relaxation, BI estimates mortgage growth will be 13.46% -14%, from 12.75% position in May 2018. As for the overall credit growth, until the end of the year BI is still optimistic in the figure of 10% -12%.

Previously, BI has relaxed the terms of down payment of home ownership loans through LTV relaxation. This policy will be effective as of 1st of August 2018.

One of the central bank policies set forth in the regulation, is the freedom of banks to determine the minimum amount of down payment to be paid for home ownership, so as to allow zero percent cost for the first buyer without excluding any amount of land or building.

“We are giving the first time buyer, not DP zero percent,” said BI Deputy Governor Erwin Rijanto, Friday (29/6/2018).

Source: CNBC Indonesia