Government Maintains Subsidised Mortgage Rate at 5 Percent, Here's Why

The government’s policy of maintaining the subsidised mortgage interest rate for low-income communities (MBR) is considered appropriate by Nailul Huda of the Center of Economics and Law Studies (Celios), given the current weakening of public purchasing power. “Therefore, the government is right not to raise the subsidised mortgage interest rate even though Bank Indonesia has raised its benchmark rate,” Nailul said in Jakarta on Wednesday (24/6).

According to Nailul, the decision to keep the subsidised mortgage rate at 5 percent helps ease the burden on the public. This policy is deemed important because the subsidised housing programme is aimed at groups that need state support to obtain housing. “The People’s Housing Credit (KPR) for subsidised homes is a government programme to provide housing to low-income people. So there must be government support for people who have already taken or will take out a subsidised mortgage,” he said.

Previously, Minister of Housing and Settlement Areas (PKP) Maruarar Sirait confirmed that the subsidised housing interest rate would not increase. The rate remains at a flat five percent from the beginning to the end of the instalment period. Maruarar, familiarly known as Ara, said that despite the increase in the BI Rate, the government is maintaining the Housing Financing Liquidity Facility (FLPP) interest rate at 5 percent. With this policy, it is hoped that people can still obtain homes with affordable instalments.

Ara assessed that the housing financing programme through the FLPP mortgage scheme is in high demand among developers. The programme is also said to make it easier for people to own liveable homes with a more affordable financing scheme. According to him, housing financing through FLPP mortgages is a concrete step by the government in encouraging people to own liveable homes. The government also considers the sustainability of the programme important to expand housing access for MBR.

Banking circles and housing developers are also said to have frequently requested that the Ministry of PKP continue the FLPP mortgage programme. The programme is expected to support the implementation of the 3 Million Homes Programme in line with the vision and mission of President Prabowo Subianto.