APPI, REI Ask for BI Rate Cut
7 August 2015 13:00 WIB
TEMPO.CO, Jakarta- The Indonesian Financial Services Association (APPI) and Real Estate Indonesia (REI) are hoping that Bank Indonesia would lower its benchmark interest rate (BI Rate), in hopes that it would lead to a decline in mortgage instalments, Antara News Agency reported Friday, August 7.
APPI secretary general Efrizal Sinaga said on Wednesday, that one of the requirements for cheaper installments is a BI Rate cut.
According to Efrizal, a BI rate cut of 25 basis points (bps) from 7.75 percent to 7.5 percent has little impact to the loan financing sector.
"The other day the BI Rate was lowered by 25 bps. The effect was minimal to industry's cost of fund, as it only amounted to a few thousand rupiah. But if BI can cut its rate by 50 percent, it would provide better stimulus and psychological impact. So the cut should be around 50-75 bps," he said.
He hopes that a BI Rate cut could be done as soon as possible, while it is still being supported by strong foreign exchange reserves and low core inflation.
According to the Central Statistics Agency (BPS), July 2015's core inflation rate stood at 4.86 percent, down from July 2014's 5.04 percent.
He also said that financial regulators should not have to wait until the Fed Rate is increased. Delaying it based on a foreign country's policy that remains unclear, he said, would be too late.
"If we wait until October and November, [investors] would have entered a holiday mindset by then, with ledgers closed and minimum work days. How much can we optimize [the policy] then?" Efrizal said.
Hari Raharta Sudrajat, secretary general of Real Estate Indonesia (REI), is also hoping for a BI Rate cut by about five to six percent, in hopes that it would boost the growth of the domestic property market.
Bank Indonesia has lowered the down payment for property mortgages from 30 percent to 20 percent. However, Hari said the cut has not been able to push up people's purchasing power on property products.
Hari said that with a high BI Rate, the average installment for property mortgages stood at two digits, which is not very friendly to customers.
"We are hoping for a single digit mortgage rate. There's no point in having a two-digit installment rate with few buyers. We'd rather have a single-digit rate but with higher demand."
ANTARA | RR
