MORTGAGE MARKET IN INDONESIA. International CONFERENCE On “ housing : A n Engine for Inclusive Growth” New Delhi, april 1 1 -1 3 , 2013. Prepared By: PT. SARANA MULTIGRIYA FINANSIAL (P ersero ) INDONESIA . AGENDA. ECONOMIC OUTLOOK P RIMARY MORTGAGE MARKET IN INDONESIA
MORTGAGE MARKET IN INDONESIA
On “housing: An Engine for Inclusive Growth”
New Delhi, april 11-13, 2013
PT. SARANA MULTIGRIYA FINANSIAL (Persero)
Indonesia has the 4th biggest population in the world with many of its people are still on their productive ages, most people lives in Java island
In general the GDP growth for the last five years is above 6%, only in 2009 relatively declined at 4.6% due to the global economic crisis.
In the beginning of 2012, Indonesia economy has become more stable, as shown on the inflation rate trend. Considering the economy condition, Bank Indonesia has decided to maintain BI Rate at 5,75%. Mortgage base lending rate, which uses BI rate as its benchmark, also remains stable.
Countries Mortgage to GDP Ratio Comparison
Per January 2012
Indonesia Mortgage to GDP Ratio
Mortgage to GDP ratio of Indonesia at the end of 2011 which is around 2.6% is still below many other countries. In 2012, Indonesia mortgage to GDP ratio has already increased to 2,70%.
No. Of Indonesian citizen
1.49% per year
Needs for housing
800,000 per year
Estimation National demand position (*)
Estimation time to address
750,000 per year
Needs for housing
Total housing demand:
1,550,000 per year
(*) SMF estimate for 2012
Housesales has been experiencing strong growth since significant drop in 2009. Total house sales for 2011 is 242,000 units,this number also shows the growth in new constructed houses. On the other hand, construction loan at the end of 2012 has reached 95.921 billion IDR. The residential property price also increase from time to time.
Mortgage portfolio in Indonesia has grown rapidly for the last couple of years. At the end of 2012, outstanding mortgage portfolio is 222 trillion IDR. On the other hand, mortgage to total bank loans is still below 10% until at the end of 2012
More than 90% of mortgagesare originated by 10 banks as major playersuntil ‘Dec 2012
80% of people who bought their houses in 2012 has used mortgage loan as their source of fund
In Indonesia, more than 86% mortgages are using mortgage loan (commercial), and the remaining 13% use the subsidized mortgages.
To Develop secondary mortgage market
To Buildand developsecondary mortgage market.
Secondary mortgage market in Indonesia is conducted through securitization transaction and liquidity facility provided by SMF
Mortgage loans use as the underlying of RMBS issuance are selected to make sure its quality. The transaction structure also ensure that investment on senior class will be very secure through ring fencing, payment seniority and credit enhancement.
RMBS that has been issued and supported by SMF are rated AAA at issuance date and their current rating are also AAA. The AAA rating shows the quality of the mortgage portfolio that underlying the transaction.
Variety of investors continues to invest in Residential Mortgage Backed Securities (RMBS)
56% of bonds that has been issued by SMF is hold by pension fund and insurance companies