Developers Enthusiastically Welcome 40-Year Mortgage Instalments, But Remind of This

JAKARTA, KOMPAS.com - Property developers have welcomed the government’s plan to introduce a mortgage (KPR) scheme of up to 40 years for informal sector workers, labourers, and fishermen. However, developers remind that consistent interest subsidies and breakthroughs from the banking sector are necessary for the programme to run optimally. Deputy Chairman of the Central Board of the Indonesian Real Estate Association (Waketum DPP REI) Bambang Ekajaya said the policy deserves appreciation as it aims to expand home ownership access for low-income communities. “The 40-year term for the informal sector, fishermen, and labourers actually deserves appreciation, provided that the applicable interest rate subsidy of five per cent remains consistent,” Bambang told Kompas.com on Sunday (3/5/2026). “However, a 40-year mortgage indeed requires breakthroughs from the banking sector. With a 40-year tenor, the first five years or more would only cover interest payments,” Bambang said. Therefore, he proposed a scheme for accelerated repayment if the debtor receives additional income or bonuses to shorten the repayment period. “If they receive a bonus or higher income, they can accelerate the repayment time,” he said. Bambang exemplified that if a labourer takes a mortgage at age 25 with a 40-year tenor, the house would only be fully paid off when the debtor reaches 65 years old. Nevertheless, Bambang assessed the main goal of the programme as positive because it provides opportunities for the public, including informal sector workers, to own their own homes rather than continuously renting. “The aim is good so that instalments are affordable, comparable to rental costs, for example, and provides certainty that every citizen, even in the informal sector, can have a home rather than renting for life,” Bambang stated. However, he emphasised the importance of simplifying credit requirements and coordination with the banking sector. According to Bambang, banks have so far been cautious towards informal sector debtors with irregular incomes. From the developers’ perspective, Bambang assured that property industry players fully support the plan because it is seen as capable of expanding the national housing market. “But we developers as home providers are very supportive because it will broaden the market share,” Bambang said. This is because increasing property needs is also believed to impact economic growth, as the property sector is linked to more than 140 other industries.