BTN to up housing loans by 26% in 2007 to meet rising demand

The Jakarta Post, Jakarta

Bank Tabungan Negara (BTN), a state-owned lender that focuses on providing mortgages, plans to set aside Rp 7.8 trillion (about US$855 million) to provide home loans next year to meet rising demand for housing.

"But it (the allocation) will still need approval from the shareholders," BTN director Kodradi said Wednesday during a seminar on the prospects for the real estate industry in 2007.

The figure represents a 26 percent increase from the Rp 5.7 trillion in home loans that it is estimated will be extended this year, of which Rp 5.2 trillion had been disbursed as of the end of October.

As economic growth continues to improve next year, which in turn will boost people's purchasing power, demand for housing loans will increase subsequently, Kodradi predicted.

The economy is expected to grow by 6.2 percent in 2007, from an estimated 5.8 percent this year.

Bank Indonesia forecasts that home loans will grow by 20 percent on average next year, while the housing market will increase from Rp 17.1 trillion in 2005 to Rp 21.5 trillion in 2007.

"We are optimistic that the money we have allocated will be lent out despite the challenges, mainly in infrastructure sector, such as electricity supply," he said.

He pointed as an example to parts of Riau, where he said there were over 6,000 newly built houses that lacked access to electricity, which in turn discouraged potential customers from purchasing them. (05)
_________________________ Indonesian Business and Investment News Aggregator