Developers Say 40-Year Mortgage Instalments Can Prevent Loan Defaults

Jakarta - Real Estate Indonesia (REI) assesses that a home ownership credit (KPR) scheme with a tenor of up to 40 years can help prevent bad loans or non-performing loans (NPL). With a longer tenor, monthly instalments are considered lighter, allowing the public to still have room to meet other needs. This was stated by the General Chairman of the Central Board (Ketum DPP) of REI, Joko Suranto, in response to discussions on 40-year KPR tenors linked to President Prabowo Subianto’s government programme to build 3 million homes. “We see it as a good thing, as it broadens opportunities for the public to access housing. Currently, increases in the regional minimum wage cannot keep up with the growth in public needs,” Joko said after a tree-planting event in Kota Baru, Lampung, on Thursday (7/5/2026). According to him, extending the tenor makes the instalment amount smaller, thus widening the public’s reach to housing financing. Joko exemplified that for someone with a monthly income of Rp 3 million who must pay Rp 1.2 million in home instalments, their financial space for other needs, such as education and health, would be narrower. However, if the tenor is extended to 40 years, the instalment could drop to around Rp 600,000 to Rp 800,000 per month, thereby maintaining the debtor’s financial condition better. “Thus, it can lighten the burden, broaden access, and also maintain the health of the credit performance,” he said. Nevertheless, he acknowledged that implementing 40-year KPR requires regulatory adjustments from several parties. According to Joko, it involves provisions from the National Land Agency (BPN), Financial Services Authority (OJK), Bank Indonesia, and banking operations. “If I look at it, this is based on the president’s concern. President Prabowo has a 3 million homes programme, meaning using housing instruments to improve public welfare,” he emphasised.