BTN’s housing loan innovation a big hit amongst millennials

With 5.8 million millennials facing the challenge of homeownership and a 79% occupancy rate amongst urban millennials, Nixon L.P Napitupulu, Vice President Director, cites the Ministry of Public Works and Public Housing report and shares his views on how Bank Tabungan Negara (BTN) offers an innovative solution through housing loans to make it easier for young Indonesians to own their first home.

“One of the causes of the millennial generation not being able to own a house is the majority of them have an income of less than $ 645.49 (IDR 10m) per month. Meanwhile, land prices continue to rise every year,” Nixon said.

According to Nixon, based on this ability, the housing range for millennials is between $12,909 (IDR 200m) to $25,819 ( IDR 400m).

Nixon also saw several criteria needed by millennials in finding housing, such as proximity to public transportation (distance less than 5 km) from transportation facilities to urban areas, residential locations on the edge or city border, near sports facilities, jogging tracks, and swimming pools, and the availability of clinics, pharmacies, shopping centres, and parks.

BTN is working with BUMN Karya and other top developers to develop housing based on Transit Oriented Development (TOD) in order to capture the desires of the millennial generation who prefer housing close to transportation and other public facilities. Currently, BTN has spread 100 millennial housing projects throughout Indonesia with a potential of $1b (IDR 15.8t). “So far we have 35,127 millennial housing stocks consisting of 16,912 highrise building units and 18,215 landed house stock units,” said Nixon.

Therefore, the bank continues to develop innovations both in terms of the housing loan programme to make it easier for the millennial generation to have their first home as well as digital innovation which is not only a trend but also a demand, especially from the millennial generation.

Flagship programmes

Nixon said that there are two programmes that are currently BTN’s flagship. First, BTN has a programme called Graduated Payment Mortgage (GPM), a tiered instalment system through a product called “KPR BTN Gaess”. “This product is indeed targeting the millennial generation where instalment payments in the first few years are lighter,” said Nixon.

Second, BTN also launched “KPR Rent to Own” for segments of society who have not been able to prepare a down payment or have not been able to buy a house in a location close to their place of work so they are still hesitant to buy a house. “With this product, people can pay rent every month whilst at the same time allocating some of their savings for future home purchases,” said Nixon.

In 2021, the BTN Gaess KPR programme has succeeded in distributing up to 203 housing units to millennials. Meanwhile, until June 2022, Gaess BTN KPR realisation has reached 946 units with a value of more than $24.66m (IDR 382b). Meanwhile, for the Rent to Own KPR product which was just released in Quarter 3/2022, BTN is targeting more than 1,000 registrants in the first year this product is launched.

Digitalisation in the residential corridor

To support the customer journey for BTN customers in accessing housing finance from pre-sales to after-sales. BTN is developing BTN Properti as a service for prospective housing loan customers that provides easy access to choosing housing units that you want to apply for mortgages and submitting them online.

Then they also developed BTN Properti for Developers, a service for property developers to carry out stock management online and at any time. As an after-sales service, BTN has also developed BTN Smart Residence as a medium for routine payment transactions to meet housing needs such as IPL, Electricity, PDAM, Security, Parking, Maintenance, etc.

In addition, the Digital Mortgage Ecosystem owned by BTN offers convenience for prospective BTN housing loan customers in accessing housing options available throughout Indonesia.

As of Q3 2022, there have been 19.6 million site visitors and 245,000 members as well as $60.8m (IDR 942b) mortgage distribution through the BTN Properti application. In the future, of course, we hope that these numbers will continue to grow.

Solid performance

As the largest mortgage provider in Indonesia, BTN continues to maintain a solid performance. Until November 2022, BTN continues to record solid performance amidst domestic and global economic challenges. BTN assets grew 4.92% to $25.6b (IDR 397t), then loans grew 8.09% to $19.1b (IDR 296t), Third Party Funds grew 7.38% to $20.78b (IDR 322t) and net profit grew significantly by 41.51% to $180m (IDR 2.79t).

NPL also continued to decline to the level of 3.51% accompanied by reserves that continued to be increased with a coverage ratio of CKPN to NPL of 148.09%.

Going forward, BTN remains optimistic that credit will continue to grow by around 10-11% amidst an increase in the benchmark interest rate. Then, DPK grew by 10-11%, NPL was below 3%, and Fee-Based Income was targeted at above $129m (IDR 2t).