Which Indonesian Home Purchasers Seek Mortgage Finance?

The incidence of taking a mortgage loan from a commercial bank or cooperative for home purchase is sharply lower in developing than industrialized countries. Indeed, the common approach for achieving good quality housing is for a family to construct and improve a dwelling over a number of years. At the same time, it may be possible for formal lenders to expand the volume of mortgage lending by marketing mortgage loans better tailored to those more prone to seek them. This analysis is based on a representative survey of households intending to purchase a dwelling in the next three years with a final sample size of 1,281 conducted in 2008 in Indonesia’s seven largest metropolitan areas. We find that those more likely to seek such loans are families who already have an established relationship with a bank or cooperative, professionals and those with higher permanent incomes, and those with greater knowledge of mortgage loans. These factors all contain important ideas to assist lenders in targeting mortgage lending marketing campaigns.