The mortgage for purchasing housing in Indonesia (KPR) will increase in 2016.

The head of the consumer banking sector at Bank Negara Indonesia (BNI), Anggoro Eko Chayo, stated that economic uncertainty eased somewhat in 2016, which has led to an increase in consumer confidence in Indonesia. This will encourage more people to decide to buy homes this year, which implies that, considering that most home purchases in Indonesia are made through credit schemes, banks will see a rise in housing loans (KPR).

In June 2015, Indonesia's central bank (Bank Indonesia) attempted to stimulate the slowing real estate market in Indonesia by lowering the loan-to-value (LTV) ratio. The country's central bank reduced the down payment (DP) requirement for purchasing a home by 10 percent to 30 percent of the property's value for the conventional banking sector, while the DP requirement was lowered by 5 percent to 20 percent for purchasing a home using Islamic financing. This move made home buying more accessible for Indonesians, as they needed less cash for the down payment.

However, he was unable to support the real estate sector due to the heightened level of ongoing uncertainty in the Indonesian economy last year.

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Now, the economy is expected to accelerate with a GDP growth of 4.8 percent (year-on-year) in 2015, and Chayo aims for a minimum growth of 10 percent (year-on-year) in KPR BNI in 2016.

Last year, BNI lent 34.7 trillion Indonesian rupiah (about US$2.6 billion) in KPR, up 4 percent from the previous year. To incentivize the company's KPR in 2016, BNI is offering an attractive package: two years of KPR with an initial rate of 8.7 percent, followed by one year with an interest rate in the range of 9.7 to 10.7 percent.

The Director of Consumer Lending at Bank Mandiri, Hery Gunardi, agrees with Chayo. Gunardi sees that loan disbursement at Bank Mandiri will grow in 2016 (especially in the second half of the year) against the backdrop of an improving macroeconomic context in Indonesia, the largest economy in Southeast Asia. Bank Mandiri aims for a 5-6 percent increase in loan disbursement in 2016.

Last year, Bank Mandiri's loan disbursement reached 26.8 trillion rupiah (approximately 2.0 billion USD), which is an increase of 1.27 percent compared to the previous year.