Friday, September 27, 2013

Bank of Indonesia Asks Banks to not Indulge Developer

By tightening the rules LTV, Bank Indonesia expects more prudent banking industry, particularly in assessing whether or not the level of the price worthy offered developers. Bank of Indonesia (BI) expect the banking industry does not spoil the developer or developers to set the price of the home or property arbitrarily. To update the rules that the central bank loan to value (LTV) by setting progressively LTV.

"We limit the exposure of the banks are not too high on property loans. Example of a property valued 2 billion, how do we know that weve cost Rp 2 billion? Throughout the market right there, but we do not know, "said Director of Communications BI Peter Jacobs, in Jakarta, Wednesday, September 25, 2013.
By the new LTV rules, he said, the central bank wants to protect banks that do not really follow market prices. Because if it turns out the real price of a property under the developer of the price offered, would be bad for business if already doing the financing bank.

"If the price is less than that, the bank could lose, if it turns debtors could not finish," said Peter.
By the new LTV rules, BI maximum lending limit of 70% of the price of homes in the 70 m2, for the first financing facility. For both facilities, third and so obtained the same debtor, subject to the lower LTV, which amounted to 60% and 50%.

This rule is also expected to make the banks have bargaining power in the provision of credit, and suddenly not follow the price of developers that do not necessarily show the real price of a house.

"Actually, certain banks they have bargaining power in the market. It was there that the banks only give 50%, there are banks that have carefully been realized if it cost 2 billion in situ or toy developer alone, "concludes Peter.

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