New mortgage regulations to cool indonesian market?

Indonesia is hoping to cool its property market with new mortgage regulations, reports World Property Channel.

The Bank Indonesia announced the new laws at the end of last month with an eye to cool down a heating up market. The measures include a new minimum down payment for second homes.

Last year, the central bank introduced a 30 per cent deposit for mortgages in an attempt to slow down speculation, but investment in Indonesia has only increased. Now, loan-to-value ratios have been reduced to 60 per cent for second homes, requiring buyers to pay a 40 per cent down payment. For additional homes, that increases to 50 per cent.

"We predict that if excessive growth continues, it will lead to the concentration of bank lending to the property sector and trigger boom and bust in the sector,” said Bank Indonesia communications department director Peter Jacobs.

Indeed, the country follows several other markets who have introduced similar cooling measures to avoid a property bubble, including Hong Kong and Beijing.