BTN will lower rates on home loans

JAKARTA (JP): Bank Tabungan Negara (BTN) will lower the interest rate on its loans for low-cost houses from its current level of 16 percent per annum to help low-income people own homes, the state-owned bank's president said yesterday.

Widigdo Sukarman told reporters after a hearing with Commission V of the House of Representatives (DPR) that the planned reduction of the interest rate by more than one percent is also aimed at encouraging developers to build more low-cost houses.

He said so far the pace of the development of low-cost houses is slower than the growth demand.

Widigdo said Bank Tabungan Negara currently holds a sufficient amount of funds that can be used to support the reduction of the lending rate. The exact new rate will be announced at a later date.

Besides public savings, the bank also manages funds from the government and two-step loans from other countries.

Widigdo acknowledged that developers generally face difficulties in providing low-cost houses due to high interest rates and increasing prices of land.

When asked about the bank's problem loans, the executive explained that the total amount of its bad and doubtful loans as of July reached Rp 48.78 billion (US$22.55 million) or 1.26 percent of its total credits of Rp 3.8 trillion, which had been extended to 743,303 borrowers.

He said that 74 percent of the bank's credits are extended to buyers of low-cost houses.(05)