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MORTGAGE MARKET IN INDONESIA INTERNATIONAL CONFERENCE ON “HOUSING: AN ENGINE FOR INCLUSIVE GROWTH” NEW DELHI, APRIL 11-13, 2013 PREPARED BY: PT. SARANA.

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Presentation on theme: "MORTGAGE MARKET IN INDONESIA INTERNATIONAL CONFERENCE ON “HOUSING: AN ENGINE FOR INCLUSIVE GROWTH” NEW DELHI, APRIL 11-13, 2013 PREPARED BY: PT. SARANA."— Presentation transcript:

1 MORTGAGE MARKET IN INDONESIA INTERNATIONAL CONFERENCE ON “HOUSING: AN ENGINE FOR INCLUSIVE GROWTH” NEW DELHI, APRIL 11-13, 2013 PREPARED BY: PT. SARANA MULTIGRIYA FINANSIAL (Persero) INDONESIA 0

2 AGENDA  ECONOMIC OUTLOOK  PRIMARY MORTGAGE MARKET IN INDONESIA  SECONDARY MORTGAGE MARKET IN INDONESIA  CONCLUSION 1

3 ECONOMIC OUTLOOK 2

4 POPULATION DEMOGRAPHIC China 1,3 Bio China 1,3 Bio India 1,2 Bio India 1,2 Bio US 313 Mio US 313 Mio Indonesia 257 Mio Indonesia 257 Mio Source : BPS (Biro Pusat Statistik) (www.bps.go.id), 2010, seconday data, 2012)www.bps.go.id Indonesia has the 4 th biggest population in the world with many of its people are still on their productive ages, most people lives in Java island Population Pyramid 3

5 ECONOMIC OUTLOOK GDP GROWTH & POPULATION Source : BPS (Biro Pusat Statistik) 2012 (www.bps.go.id)www.bps.go.id Estimation :1,49% population growth/year In general the GDP growth for the last five years is above 6%, only in 2009 relatively declined at 4.6% due to the global economic crisis. 4

6 ECONOMIC OUTLOOK Source : Bank Indonesia ‘Des 2012 (www.bi.go.id) In the beginning of 2012, Indonesia economy has become more stable, as shown on the inflation rate trend. Considering the economy condition, Bank Indonesia has decided to maintain BI Rate at 5,75%. Mortgage base lending rate, which uses BI rate as its benchmark, also remains stable. MORTGAGE BASE LENDING RATE, BI RATE, & INFLATION 5

7 PRIMARY MORTGAGE MARKET IN INDONESIA 6

8 7 MORTGAGE TO GDP RATIO Source : SMF Research ‘January 2012, Bank Indonesia Mortgage to GDP ratio of Indonesia at the end of 2011 which is around 2.6% is still below many other countries. In 2012, Indonesia mortgage to GDP ratio has already increased to 2,70%. Countries Mortgage to GDP Ratio Comparison Per January 2012 Indonesia Mortgage to GDP Ratio

9 PRIMARY MORTGAGE MARKET IN INDONESIA No. Of Indonesian citizen Population growth Needs for housing 257 milion 1.49% per year 800,000 per year Estimation National demand position (*) Estimation time to address Needs for housing 15 milion 20 years 750,000 per year Total housing demand: 1,550,000 per year Total housing demand: 1,550,000 per year 8 HOUSING DEMAND (*) SMF estimate for 2012

10 PRIMARY MORTGAGE MARKET IN INDONESIA 9 HOUSING SALES, CONSTRUCTION LOAN & RESIDENTIAL PROPERTY PRICE INDEX Source : BI, Ministry of Housing, REI, APERSI, Spire estimation & Analysis House sales has been experiencing strong growth since significant drop in Total house sales for 2011 is 242,000 units, this number also shows the growth in new constructed houses. On the other hand, construction loan at the end of 2012 has reached billion IDR. The residential property price also increase from time to time.

11 PRIMARY MORTGAGE MARKET IN INDONESIA 10 SUPPLY AND DEMAND The gap between supply and demand of houses remains big. 1.The total demand of 1.55 million units from: Current Indonesia’s Housing demand position over 15 million units, requiring approx. 750,000 units per year to be built in 20 year, Housing needs from population growth is recorded at 800,000 units per year 2.Supply of New Housing Construction of approx. 240,000 units in 2011 but still almost always below housing demand. The big gap shows an opportunity for supply of new houses construction.

12 PRIMARY MORTGAGE MARKET IN INDONESIA OUTSTANDING MORTGAGE PORTFOLIO & MORTGAGE TO TOTAL BANK LOANS RATIO Source : Bank Indonesia, Dec 2012 Mortgage portfolio in Indonesia has grown rapidly for the last couple of years. At the end of 2012, outstanding mortgage portfolio is 222 trillion IDR. On the other hand, mortgage to total bank loans is still below 10% until at the end of

13 PRIMARY MORTGAGE MARKET IN INDONESIA Source: The Indonesian Banking Statistics (SPI), Bank Indonesia (Central Bank of Indonesia), Dec 2012 More than 90% of mortgages are originated by 10 banks as major players until ‘Dec 2012 MORTGAGE MARKET SHARE 12

14 PRIMARY MORTGAGE MARKET IN INDONESIA HOME OWNERSHIP PAYMENT METHOD Source : Bank Indonesia, Quarter IV % of people who bought their houses in 2012 has used mortgage loan as their source of fund 13

15 PRIMARY MORTGAGE MARKET IN INDONESIA 14 MORTGAGE LOAN TYPES In Indonesia, more than 86% mortgages are using mortgage loan (commercial), and the remaining 13% use the subsidized mortgages.

16 SECONDARY MORTGAGE MARKET IN INDONESIA 15

17 16 BACKGROUND OF DEVELOPMENT OF SECONDARY MORTGAGE MARKET IN INDONESIA The government program: to provide decent & affordable houses for every Indonesia family. It required the availability of housing development funds that more effectively and efficiently with sufficient mortgage volumes, sustainable and affordable, seen from accessibility to obtain house and affordable interest rates. Mortgage is long term financing, so that required long-term funding from the capital markets to avoid maturity mismatch. Therefore, the government established PT Sarana Multigriya Finansial (Persero) / “SMF”, that served to facilitate funds flow from capital market to the housing finance sector with securitization and liquidity facility

18 17 ROAD MAP To Develop secondary mortgage market  Liquidity Facility  Securitization  Securitization & Guarantor (Mortgage & RMBS)  Housing Finance Information System / HFIS Facilitator Catalysator To Build and develop secondary mortgage market Liquidity Facility Securitization Liquidity Facility Securitization Securitization-Guarantee HFIS Securitization-Guarantee HFIS

19 DEVELOPMENT OF SECONDARY MORTGAGE MARKET IN INDONESIA  Securitization Program provide a mechanism of sales of mortgage loans and issue of mortgage backed securities.  Liquidity Facility Program provide medium to long term loans for mortgage lenders.  Guarantee Program provide guarantee for obligation / mortgage backed securities issued by mortgage lenders.  Support Programs -Provide a guidence and mortgage document standard -Education and training programs -Socialization (workshop, seminar, product introductions) THE COMPANY’S PROGRAMS 18

20 DEVELOPMENT OF SECONDARY MORTGAGE MARKET IN INDONESIA Secondary mortgage market in Indonesia is conducted through securitization transaction and liquidity facility provided by SMF SECONDARY MORTGAGE MARKET GROWTH 19

21 DEVELOPMENT OF SECONDARY MORTGAGE MARKET IN INDONESIA RMBS SUPPORTED BY SMF Subordination (Junior Class) Reserve Account Servicer transition fund Credit Enhancement Assets Quality 32 Selection Criteria Ring-fencing Bankruptcy Remoteness Payment Seniority Principal payment will be pass through to RMBS class A (Senior Class) Any lost will hit RMBS class B first PRIME RMBS idAAA Mortgage loans use as the underlying of RMBS issuance are selected to make sure its quality. The transaction structure also ensure that investment on senior class will be very secure through ring fencing, payment seniority and credit enhancement. 20

22 DEVELOPMENT OF SECONDARY MORTGAGE MARKET IN INDONESIA RMBS ISSUANCE RMBSIssuance Date Weighted Average Remaining Time to Maturity (Years) Total Issuance (Billion Rp) RMBS Coupon Class-A Class A Rating on Issuance Current Rating I11/02/ %idAAA II10/11/ %idAAA III27/12/ %idAAA IV17/11/ %idAAA V13/12/ %idAAA RMBS that has been issued and supported by SMF are rated AAA at issuance date and their current rating are also AAA. The AAA rating shows the quality of the mortgage portfolio that underlying the transaction. 21

23 DEVELOPMENT OF SECONDARY MORTGAGE MARKET IN INDONESIA RMBS HOLDERS Current Position (Dec ‘12) Variety of investors continues to invest in Residential Mortgage Backed Securities (RMBS) 22

24 DEVELOPMENT OF SECONDARY MORTGAGE MARKET IN INDONESIA SMF BOND HOLDERS Source: Indonesia Central Secuities Depository (KSEI), Desember % of bonds that has been issued by SMF is hold by pension fund and insurance companies 23

25 CONCLUSION 1.Indonesia’s economy continues to grow despite the global economy slowdown. Based on gross domestic product (GDP) growth, Indonesia’s economy grew 6,23% (yoy) in Since Inflation rate has been stable until December 2012 (4,30% yoy), Bank Indonesia decided to maintain the BI rate at 5,75%. The government of Indonesia also realize that it is important to maintain macroeconomic stability, sustainable economic growth & political stability. 2.As the population grows, the needs for housing continue to rise and considering today national housing backlog as much as 15 millions units, 1,55 millions unit new houses should be built every year. It is critical for Indonesia to build a robust housing finance system to fulfill that needs. 3.Through strengthening the primary mortgage market and developing secondary mortgage market, availability of sustainable medium to long term fund will eventually increase affordability. 4.To develop the secondary mortgage market and to build investor confidence to invest in RMBS, SMF only facilitate prime RMBS with the highest rating. 5.The existance of secondary mortgage market is crucial to provide long term fund for mortgage lenders. To build and develop secondary mortgage market, it requires government and stake holders supports. 24

26 HOUSING FINANCE IN INDONESIA 25

27 SEKURITISASI PERAN SMF: PPENERBIT EBA (dalam proses) PPENATA SEKURITISASI, PPENDUKUNG KREDIT, IINVESTOR PERUMAHAN EBA PRODUKSI KPR PASAR SEKUNDER PASAR MODAL INVESTOR DEVELOPER HAK TAGIH KPR PEMBIAYAAN AGUNAN KPR OBLIGASI DANA OBLIGASI PENYALUR KPR Mechanism kanisme Transaksi Pembiayaan Sekunder Perumahan 26


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