Subsidized House interest rate may rise

JAKARTA. The government is planning to change the interest subsidy scheme on Housing Finance Liquidity Facility (FLPP) or the government-backed mortgage in 2017. In 2016, the government’s portion of the financing program reached 90%. The number will be reduced in this year so that the portion of bank’s contribution will increase. As the consequence, the interest rate will also increase.

Director General of Housing Finance at the Ministry of Public Works and People Housing Maurin Sitorus said, the changes in the financing scheme aims at increasing the financing funds. Therefore, more houses will be built.

As information, in 2016, the government covered 90% of the financing for cheap housing program. This has reduced the interest rate from 12% to 5%.

Last year, the government provided Rp 9.2 trillion funds for FLPP program. This year, the government’s provision of FLPP funds will be increased by 5.43% to Rp 9.7 trillion. Under the scheme of 90:10, the portion of private sector (banking) will be only Rp 1.07 trillion. Therefore, the total FLPP funds for this year will be Rp 10.7 trillion.

With the larger portion for private sector, the FLPP funds will also increase. For an example, with the scheme of 85:15, the total amount of LFPP funds will be Rp 114 trillion. However, the interest rate will be increasing, as the banks’ risks will also be higher.

According to Maurin, to date Housing Finance Fund Management Center (PPDPP) along with banking sector are discussing the scheme of FLPP for 2017. The new scheme is scheduled to be determined in the middle January 2017.

Maurin said, the trend of decrease in interest rate will likely to increase the portion of banking sector in housing finance. “Both in developing and developed countries, there is no scheme, which solely depends on the government in coping with housing problems,” Maurin said.

Access for informal workers

In order to open wide access to afford housing, the government will realize the FLPP program for informal workers.

Director General of Housing Provisions at Ministry of Public Works and People Housing Syarif Burhanuddin said, the government will make a number of breakthroughs, including by applying modular system to make sure that the number of houses built in this year is in sync with the target. The components for building the houses will be massively produced so that “It will reduce the house price,” Syarif said. (Muhammad Farid/Translator)