40-Year Mortgage: How Will the Risk of Borrower Death Be Mitigated?

Jakarta – The government is still finalising the risk-mitigation framework for the implementation of the Mortgage Credit (KPR) with a tenor of up to 40 years. This also includes anticipating risks of consumers dying or facing economic difficulties during the repayment period. Director General of Urban Areas at the Ministry of Housing and Settlement Areas (PKP) Sri Haryati said that discussions on the long-tenor scheme are not yet final because they still require in-depth study with developers and banks. “Actually, it’s not yet final because there are other discussions. Because, earlier the discussion about 40 years would also involve insurance that will presumably extend,” Sri said at her office in Jakarta on Monday, 18 May 2026. According to her, the Housing Savings Management Agency (BP Tapera) has drawn up a simulation of people’s ability to service their loans based on data from the National Labour Force Survey (Sakernas) of the Indonesian Central Statistics Agency (BPS), including low-income households (MBR) in the agricultural sector roughly Rp 2.43 million. He added that the 40-year tenor scheme is designed to remain within people’s ability to repay subsidised housing instalments. “We have also prepared a scheme for 40 years that is within their ability to service the instalments,” he continued. Nevertheless, Sri acknowledged that the long tenor also brings a number of risks that need to be anticipated from the outset. Therefore, further discussions will still be conducted with stakeholders. “We also obviously have to mitigate the risks involved. Therefore, we will have one more round of discussions with developers, banks and others,” Sri said. In those discussions, the government will examine a range of protective instruments, including an insurance scheme during the lifetime of the KPR. “There was discussion on what the risks are, what the insurance would look like, etc., still under discussion,” he said. “Indeed, the main aim of this programme is to open access for people to own their first home as soon as possible,” Sid said at the same event. Regarding the risks during the long tenor, BP Tapera is preparing a number of mitigation instruments to protect both consumers and financing institutions. “For the risks during the tenor, as the Director General has already stated, we will discuss it more thoroughly,” Sid said. According to him, several protection schemes under discussion include credit insurance, life insurance, and fire insurance. “Among them are credit insurance, life insurance, and fire insurance, which apparently will address how to mitigate the risks during the KPR tenor,” Sid concluded.