mortgage market in indonesia international conference on “housing: an engine for inclusive...

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 1

AGENDA

ECONOMIC OUTLOOK

PRIMARY MORTGAGE MARKET IN INDONESIA

SECONDARY MORTGAGE MARKET IN INDONESIA

CONCLUSION

2

ECONOMIC OUTLOOK

3

ECONOMIC OUTLOOK

POPULATION DEMOGRAPHIC

China1,3 Bio

India1,2 Bio

US313 Mio

Indonesia257 Mio

Source : BPS (Biro Pusat Statistik) (www.bps.go.id), 2010, seconday data, 2012)

Indonesia has the 4th biggest population in the world with many of its people are still on their productive ages, most people lives in Java island

Population Pyramid

4

21%

57%

6%

7%2% 7%

Population Distribution

Sumatera

Java

Kalimantan

Sulawesi

Papua

Others

http://www.bps.go.id/

ECONOMIC OUTLOOK

GDP GROWTH & POPULATION

Source : BPS (Biro Pusat Statistik) 2012 (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.

5

2008 2009 2010 2011 20120.00%

1.00%

2.00%

3.00%

4.00%

5.00%

6.00%

7.00%

220,000,000

225,000,000

230,000,000

235,000,000

240,000,000

245,000,000

250,000,000

6.00%

4.60%

6.10%6.50%

6.23%

Population GDP

http://www.bps.go.id/

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

6

Dec-11 Jan-12 Feb-12 Mar-12 Apr-12 May-12 Jun-12 Jul-12 Aug-12 Sep-12 Oct-12 Nov-12 Dec-120.00%

2.00%

4.00%

6.00%

8.00%

10.00%

12.00%10.91% 10.85% 10.73% 10.85% 10.80% 10.71% 10.68% 10.67% 10.65% 10.65% 10.65% 10.65% 10.63%

6.00% 6.00%5.75% 5.75% 5.75% 5.75% 5.75% 5.75% 5.75% 5.75% 5.75% 5.75% 5.75%

3.79% 3.65% 3.56%3.97%

4.50% 4.45% 4.53% 4.56% 4.58%4.31%

4.61%4.32% 4.30%

Mortgage Base Lending Rate BI Rate Inflation


7

PRIMARY MORTGAGE MARKET IN INDONESIA 8

MORTGAGE TO GDP RATIO

Source : SMF Research ‘January 2012, Bank Indonesia

UK

Swed

ia

Jepa

ng

Korea

Selat

an

Mala

ysia

Thaila

ndIn

dia

Mon

golia

Turki

Bangl

ades

h

Indo

nesia

Paki

stan

85.0%

57.9%

37.0%31.2%31.0%

24.9%

9.0%6.1%4.5%4.0%2.6%1.0%

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

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 20120.0%

0.5%

1.0%

1.5%

2.0%

2.5%

3.0%

0.8%0.7%

1.2%1.3%

1.7%1.8%

2.0% 2.0% 2.1%2.2%

2.5%

2.7%


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

9

HOUSING DEMAND

(*) SMF estimate for 2012


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 2009. 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 95.921 billion IDR. The residential property price also increase from time to time.

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

Volume (Thousand Units)

106.5 121.3 134.5 150.6 169 163.6 191.7 231.4 173.4 212.3 242.3

Value (IDR Trillion)

4.04 7.13 8.16 11.45 16.2 17.56 23 29.37 25.93 31.08 37.96

25

75

125

175

225

275

2.5

7.5

12.5

17.5

22.5

27.5

32.5

37.5

House Sales

120

125

130

135

140

145

150

155

160

165 162.04

152.64

143.23

Residential Property Price Index

Small Medium Large

2006 2007 2008 2009 2010 2011 2012

0

20,000

40,000

60,000

80,000

100,000

120,000

33,088

44,088

58,75364,225 63,500

75,395

95,921

Construction Loans

bil

lio

n I

DR


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.


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 2012

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 -

50

100

150

200

250

12 11 21

31 46

65

84

108 124

141

183

222

Outstanding Mortgage Portofolio

Tri

llio

n ID

R

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 20120.00%

1.00%

2.00%

3.00%

4.00%

5.00%

6.00%

7.00%

8.00%

9.00%

3.83%

2.91%

4.76%

5.46%

6.63%

7.69%

7.78%

7.72%

8.01%

7.96% 8.30%

8.21%

Mortgage to Total Bank Loans Ratio

12


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

46.32%

46.77%

5.62% 0.95% 0.34%

State Owned Banks

Private National Banks

Regional Government Banks

Foreign Bank & Joint Banks

Rural Banks

13


HOME OWNERSHIP PAYMENT METHOD

Source : Bank Indonesia, Quarter IV 2012

80% of people who bought their houses in 2012 has used mortgage loan as their source of fund

14

80.00%

11.33% 8.67%

Mortgage Loan

Cash Instalment

Hard Cash


MORTGAGE LOAN TYPES

98.91%

1.09%

99.24%

0.76%

87.35%12.65% 86.84%

13.16%

Mortgage Loan (Commercial)

Mortgage Subsidies (FLPP)

Q1-2012

Q2-2012

Q3-2012

Q4-2012

In Indonesia, more than 86% mortgages are using mortgage loan (commercial), and the

remaining 13% use the subsidized mortgages.

SECONDARY MORTGAGE MARKET IN INDONESIA

16

17

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

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.

2005 2018

Liquidity Facility

Securitization

Liquidity FacilitySecuritization

Securitization-Guarantee

HFIS

Securitization-Guarantee

HFIS

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 Programprovide medium to long term loans for mortgage lenders.

Guarantee Programprovide 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

19


Secondary mortgage market in Indonesia is conducted through securitization transaction and liquidity facility provided by SMF

SECONDARY MORTGAGE MARKET GROWTH

2005 2006 2007 2008 2009 2010 2011 20120

1,000

2,000

3,000

4,000

5,000

6,000

502

1,252

1,954

2,955

0

1,347

2,049

3,303

5,555

Securitization Lending

In b

illi

on I

DR

20


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.

21


RMBS ISSUANCE

RMBS Issuance DateWeighted Average Remaining Time to

Maturity(Years)

Total Issuance(Billion Rp)

RMBS Coupon Class-

A

Class ARating on Issuance

Current Rating

I 11/02/2009 5.30 111 13% idAAA idAAA

II 10/11/2009 5.63 391 11% idAAA idAAA

III 27/12/2010 5.35 750 9.25% idAAA idAAA

IV 17/11/2011 5.94 703 8.75% idAAA idAAA

V 13/12/2012 6.35 1.000 7.75% idAAA 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.

22


RMBS HOLDERSCurrent Position

(Dec ‘12)

Variety of investors continues to invest in Residential Mortgage Backed Securities (RMBS)

23

52.01%

31.69%

13.00%3.30%

RMBS I

Pension Fund

Financial Institution

Banks

Private Companies

71.82%

21.67%

5.76% 0.76%

RMBS II

Mutual Fund

Pension Fund


Foundation

47.20%

39.18%

7.26%

5.34% 0.73% 0.29%

RMBS III

Banks

Pension Fund

Foreign Institution


Foundation

Insurance

32.56%

31.01%

23.26%

11.63% 1.55%

RMBS IV


Government Institution

Banks

Pension Fund

Foundation

60.62%20.00%

12.57%5.73% 1.08%

RMBS V

Pension Fund

Insurance


Foundation

Banks


SMF BOND HOLDERS

Source: Indonesia Central Secuities Depository (KSEI), Desember 2012

56% of bonds that has been issued by SMF is hold by pension fund and insurance companies

24

Insurance 38.23%

Domestic Banks 25.95%

Pension Fund 12.31%

Incorporated Company

12.23%

Mutual Fund 5.80%

Institution Foreign 1.87%Individual 1.56% Mutual Fund More Than 5 Years 1.31%

Foundation 0.75%

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 2012. 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.

25

THANK YOUPT SARANA MULTIGRIYA FINANSIAL (PERSERO)

Grha SMFJl. Panglima Polim I No. 1,Jakarta 12160, Indonesia

www.smf-indonesia.co.id

HOUSING FINANCE IN INDONESIA

26

http://www.smf-indonesia.co.id/

SEKURITISASI

PERAN SMF: PENERBIT EBA (dalam proses) PENATA SEKURITISASI, PENDUKUNG KREDIT, INVESTOR

PERUMAHAN

EBA

PR

OD

UK

SI K

PR

PAS

AR

SE

KU

ND

ER

PASAR MODAL

INVESTOR

DEVELOPER

HAK TAGIHKPR

PEMBIAYAAN

AGUNAN KPR

OBLIGASI

DANA OBLIGASI

PENYALUR KPR

Mechanism kanisme Transaksi Pembiayaan Sekunder Perumahan

27

mortgage market in indonesia international conference on “housing: an engine for inclusive...

Documents

bank indonesia mortgage

indonesia source

mio indonesia

indonesia economy

countries mortgage

indonesia conclusion

indonesia family

mortgage market share