Jakarta. Nixon LP Napitupulu, the CEO of state-owned mortgage lender Bank Tabungan Negara (BTN), recommends extending the housing loan (KPR) repayment duration to a maximum of 35 years, providing an opportunity for the younger generation to become homeowners. 

Typically, the period for a long-term mortgage loan ranges from 15 to 30 years.

Nixon supports the government's plan to adopt this scheme, highlighting its potential advantages for millennials and Generation Z, who face challenges in purchasing their own homes.

"Especially for millennials and Generation Z, this scheme will be the answer to having their own homes and an investment for the future," Nixon said in Jakarta, as quoted by Investor Daily on Monday.

Meanwhile, BTN's Chief Economist, Winang Budoyo, said that a graduated interest rate scheme would attract consumers. "We see the option of graduated interest rates as beneficial for both customers and banks as the financial ability of customers tends to improve over time," said Winang.

He explained that the graduated interest rate scheme means that after a certain period, the interest rate can be gradually increased. Winang suggested that this incremental increase should take place over 10 years.

"Historically, we see that within a 10-year period, the economic conditions of mortgage customers have improved compared to when they first took out the loan," Winang said.

The proposed 35-year mortgage scheme is currently under review by the Directorate General of Financing for Infrastructure, Public Works, and Housing at the Ministry of Public Works and Housing.

This scheme is adopted from the successful Japanese mortgage system. The plan for the 35-year mortgage scheme is also a step-by-step approach by the government towards achieving zero housing backlog by 2045. As of 2021, the housing backlog in Indonesia is still at 12.71 million units.