Consultant: 40-year subsidized mortgage tenor supports low-income homeownership

Extending the subsidized mortgage tenor to 40 years is an innovation to support homeownership for low-income households (MBR). Knight Frank Indonesia has revealed that the proposed 40-year term would help the government’s subsidized housing programme, making monthly repayments more affordable and reducing financial burdens on MBRs, said Syarifah Syaukat, Senior Research Advisor at Knight Frank Indonesia.

She noted that the national housing backlog remains at around 43 million units. The government, through the Ministry of Housing and Residential Areas (PKP), continues to innovate to provide access to decent housing.

However, a 40-year term requires long-term commitment from buyers, and regulatory strengthening is needed for implementation. Collaboration with other stakeholders, such as developers and banks, is also necessary to reach agreements on implementing the programme.

‘The hope is that a 40-year mortgage will reduce the national backlog and improve access to homeownership for low-income households,’ she added.

The Ministry of Housing and Residential Areas (PKP) has stated that an optional 40-year subsidized mortgage repayment scheme could help citizens own homes. Sri Haryati, Director General of Urban Housing at the Ministry of PKP, said the optional scheme is under discussion with the People’s Housing Savings Management Agency (BP Tapera) and banks. The 40-year scheme is optional and tailored to the public’s ability, meaning citizens will choose based on their financial capacity. Sri added that the scheme would greatly assist those who previously had no hope of homeownership, as the 40-year repayment option now makes it possible for them to own a home.