REI Supports Extended 30-Year Mortgage Terms to Safeguard Low-Income Housing Dreams

JAKARTA – The Indonesian Real Estate Association (REI), the national developer association, has openly signalled full support for the subsidised mortgage policy with extended 30-year tenors.

The policy, which has received approval from Finance Minister Purbaya Yudhi Sadewa, is regarded as a vital instrument to protect the affordability of low-income earners (MBR) who are increasingly squeezed by inflation and global geopolitical turmoil.

REI Chairman Joko Suranto views the extension of the tenor as a realistic step. From the developers’ perspective, the biggest obstacle for low-income earners is not merely the down payment, but the size of monthly instalments that often exceed one-third of their fixed income.

However, the policy does not come without challenges. Whilst monthly payments decline, the total interest paid by consumers over three decades will increase significantly.

REI has responded by promoting financial education to encourage consumers to make additional payments or reduce loan principal when their income increases in the future, rather than falling into consumptive behaviour.

On the government’s side, the administration has set a target of distributing 350,000 subsidised mortgages through the Housing Financing Liquidity Facility (FLPP) in 2026.

This figure is considered aggressive given that last year’s achievement reached only 83 per cent of the target.

Joko acknowledged that to meet this target, the government can no longer rely on conventional methods.

These include streamlining permits, as licensing has been a persistent “ghost” haunting affordable housing developers.

Secondly, there should be a focus on developing vertical housing in urban areas to optimise increasingly limited land.

One of the smartest strategies promoted by REI is large-scale collaboration with BPJS Ketenagakerjaan (BPJS-TK), the workers’ social security agency.

Data shows that 76 per cent of FLPP subsidy recipients are BPJS-TK members. This makes sense because they have measurable risk profiles with fixed income and clear employment status.

“If this cooperation can be organised at the district level on a massive scale, then I am confident the target of 350,000 units can be achieved,” Joko stated firmly.