KPR Distribution Grows Highly in Proportion to the Non-Performing Loan Ratio
The Financial Services Authority (OJK) reported that despite tighter liquidity due to the increase in the benchmark interest rate in the past year, housing loan (KPR) and apartment loan (KPA) disbursements remained high.
As of the end of June 2024, total KPR disbursement reached Rp697.26 trillion, contributing 9.32% of total loans, while KPA stood at Rp30.13 trillion or 0.41% of total loans.
"KPR disbursement growth increased by 13.97% year-on-year (yoy), while KPA grew by 7.26%, exceeding the 12.36% growth in total loans," said Dian Ediana Rae, OJK's Executive Head of Banking Supervision, in a written statement on Sunday (15/9/2024).
The increase in KPR and KPA disbursements occurred after Bank Indonesia (BI) raised the benchmark interest rate by 25 basis points to 6.25% since April 2024, which impacted the rise in deposit rates.
The government's incentive policy of 100% VAT exemption for the property sector since November 2023 is also expected to have contributed to the increase in KPR and KPA disbursements.
The extension of the 100% VAT exemption incentive until the end of December 2024, after previously ending on June 30, 2024, is predicted to further drive KPR disbursements.
However, it should be noted that the non-performing loan (NPL) ratio for property loans is higher compared to the total loan NPL.
As of the end of June 2024, the total loan NPL stood at 2.26%, while the property loan NPL reached 2.64%, with KPR NPL at 2.40% and KPA NPL at 2.62%.
In July 2024, the property loan NPL increased to 2.68%, although this figure was lower than the 2.81% recorded in July 2023 (yoy).
The banking sector cited the increase in property loan NPL due to a decline in purchasing power, which weakened the repayment capacity of KPR/KPA debtors.
