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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

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MORTGAGE MARKET IN INDONESIA

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Mortgage market in indonesia

MORTGAGE MARKET IN INDONESIA

International CONFERENCE

On “housing: An Engine for Inclusive Growth”

New Delhi, april 11-13, 2013

Prepared By:

PT. SARANA MULTIGRIYA FINANSIAL (Persero)

INDONESIA


Agenda

AGENDA

  • ECONOMIC OUTLOOK

  • PRIMARY MORTGAGE MARKET IN INDONESIA

  • SECONDARY MORTGAGE MARKET IN INDONESIA

  • CONCLUSION


Mortgage market in indonesia

ECONOMIC OUTLOOK


Population demographic

POPULATION DEMOGRAPHIC

China

1,3 Bio

India

1,2 Bio

US

313 Mio

Indonesia

257 Mio

Population Pyramid

  • Source : BPS (Biro Pusat Statistik) (www.bps.go.id), 2010, seconday data, 2012)

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


Gdp growth population

GDP GROWTH & POPULATION

  • Source : BPS (Biro Pusat Statistik) 2012 (www.bps.go.id)

  • Estimation :1,49% population growth/year

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.


Mortgage base lending rate bi rate inflation

MORTGAGE BASE LENDING RATE, BI RATE, & INFLATION

  • Source : Bank Indonesia ‘Des 2012 (www.bi.go.id)

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.


Primary mortgage market in indonesia

PRIMARY MORTGAGE MARKET IN INDONESIA


Mortgage to gdp ratio

MORTGAGE TO GDP RATIO

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%.

  • Source : SMF Research ‘January 2012, Bank Indonesia


Housing demand

HOUSING DEMAND

No. Of Indonesian citizen

257 milion

Population growth

1.49% per year

Needs for housing

800,000 per year

Estimation National demand position (*)

15 milion

20 years

Estimation time to address

750,000 per year

Needs for housing

Total housing demand:

1,550,000 per year

(*) SMF estimate for 2012


Housing sales construction loan residential property price index

HOUSING SALES, CONSTRUCTION LOAN & RESIDENTIAL PROPERTY PRICE INDEX

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.

  • Source : BI, Ministry of Housing, REI, APERSI, Spire estimation & Analysis


Supply and demand

SUPPLY AND DEMAND

  • The gap between supply and demand of houses remainsbig .

  • The total demand of 1.55 million units from:

    • Current Indonesia’s Housing demand positionover 15 million units, requiring approx. 750,000 units per year to be built in 20 year,

    • Housing needs from population growth is recorded at 800,000 units per year

  • Supply of New Housing Construction of approx. 240,000units in 2011 but still almost always below housing demand.

  • The big gap shows an opportunity for supply of new houses construction.


Outstanding mortgage portfolio mortgage to total bank loans ratio

OUTSTANDINGMORTGAGE PORTFOLIO & MORTGAGE TO TOTAL BANK LOANS RATIO

  • Source : Bank Indonesia, Dec 2012

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


Mortgage market share

MORTGAGE MARKET SHARE

  • Source: The Indonesian Banking Statistics (SPI), Bank Indonesia (Central Bank of Indonesia), Dec 2012

More than 90% of mortgagesare originated by 10 banks as major playersuntil ‘Dec 2012


Home ownership payment method

HOME OWNERSHIP PAYMENT METHOD

  • Source : Bank Indonesia, Quarter IV 2012

80% of people who bought their houses in 2012 has used mortgage loan as their source of fund


Mortgage loan types

MORTGAGE LOAN TYPES

In Indonesia, more than 86% mortgages are using mortgage loan (commercial), and the remaining 13% use the subsidized mortgages.


Secondary mortgage market in indonesia

SECONDARY MORTGAGE MARKET IN INDONESIA


Background of development of secondary mortgage market in indonesia

BACKGROUND OF DEVELOPMENT OF SECONDARY MORTGAGE MARKET IN INDONESIA

  • The government program: to provide decent & affordable houses for every Indonesia family.

  • It required the availability of housing development funds that more effectively and efficiently with sufficient mortgage volumes, sustainable and affordable, seen from accessibility to obtain house and affordable interest rates.

  • Mortgage is long term financing, so that required long-term funding from the capital markets to avoid maturity mismatch.

  • Therefore, the government established PT Sarana Multigriya Finansial (Persero) / “SMF”, that served to facilitate funds flow from capital market to the housing finance sector with securitization and liquidity facility


Road map

ROAD MAP

Catalysator

2018

2005

To Develop secondary mortgage market

Facilitator

To Buildand developsecondary mortgage market.

  • Liquidity Facility

  • Securitization

  • Securitization &Guarantor (Mortgage & RMBS)

  • Housing Finance Information System / HFIS

Securitization-Guarantee

HFIS

Liquidity Facility

Liquidity Facility

Securitization

Securitization

Securitization-Guarantee

HFIS


The company s programs

THE COMPANY’S PROGRAMS

  • Securitization Program

  • provide a mechanism of sales of mortgage loans and issue of mortgage backed securities.

  • Liquidity Facility Program

  • provide medium to long term loans for mortgage lenders.

  • Guarantee Program

  • provide guarantee for obligation / mortgage backed securities issued by mortgage lenders.

  • Support Programs

    • -Provide a guidence and mortgage document standard

    • -Education and training programs

    • -Socialization (workshop, seminar, product introductions)


Secondary mortgage market growth

SECONDARY MORTGAGE MARKET GROWTH

Secondary mortgage market in Indonesia is conducted through securitization transaction and liquidity facility provided by SMF


Rmbs supported by smf

RMBS SUPPORTED BY SMF

Ring-fencing

  • Bankruptcy Remoteness

Credit Enhancement

  • Subordination (Junior Class)

  • Reserve Account

  • Servicer transition fund

PRIME RMBS

idAAA

Assets Quality

  • 32 SelectionCriteria

Payment Seniority

  • Principal payment will be pass through to RMBS class A (Senior Class)

  • Any lost will hit RMBS class B first

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 issuance

RMBS ISSUANCE

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.


Rmbs holders

RMBS HOLDERS

Current Position

(Dec‘12)

Variety of investors continues to invest in Residential Mortgage Backed Securities (RMBS)


Smf bond holders

SMF BOND HOLDERS

  • Source: Indonesia Central Secuities Depository (KSEI), Desember 2012

56% of bonds that has been issued by SMF is hold by pension fund and insurance companies


Conclusion

CONCLUSION

  • Indonesia’s economy continues to grow despite the global economy slowdown. Based ongross domestic product (GDP) growth, Indonesia’s economy grew 6,23% (yoy) in 2012.Since Inflation rate has been stable until December 2012 (4,30% yoy), Bank Indonesia decided to maintain the BI rate at 5,75%.  The government of Indonesia also realize that it is important to maintain macroeconomic stability, sustainable economic growth & political stability.

  • As the population grows,the needs for housing continue to rise and considering today national housing backlog as much as 15 millions units, 1,55 millions unit new houses should be built every year. It is critical for Indonesia to build a robust housing finance system to fulfill that needs.

  • Through strengthening the primary mortgage market and developing secondary mortgage market, availability of sustainable medium to long term fund will eventually increase affordability.

  • To develop the secondary mortgage market and to build investor confidence to invest in RMBS, SMF only facilitate prime RMBS with the highest rating.

  • The existance of secondary mortgage market is crucial to provide long term fund for mortgage lenders. To build and develop secondary mortgage market, it requires government and stake holders supports.


Housing finance in indonesia

HOUSING FINANCE IN INDONESIA

  • THANK YOU

  • PT SARANA MULTIGRIYA FINANSIAL (PERSERO)

  • Grha SMF

  • Jl. PanglimaPolim I No. 1,

  • Jakarta 12160, Indonesia

  • www.smf-indonesia.co.id


Me chanism kanisme transaksi pembiayaan sekunder perumahan

Mechanismkanisme Transaksi Pembiayaan Sekunder Perumahan

HAK TAGIH

KPR

SEKURITISASI

EBA

PASAR SEKUNDER

PRODUKSI KPR

PASAR MODAL

PENYALUR KPR

PEMBIAYAAN

OBLIGASI

INVESTOR

AGUNAN KPR

DANA OBLIGASI

  • PERAN SMF:

  • PENERBIT EBA (dalam proses)

  • PENATA SEKURITISASI,

  • PENDUKUNG KREDIT,

  • INVESTOR

DEVELOPER

DANA HASIL

PENJUALAN EBA

PERUMAHAN


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