Sustainability of Loan-To-Value Policy and Mortgage Market in Indonesia: Supply-Demand Analysis

Auryn Khansa Maharani () and Rofikoh Rokhim ()
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Auryn Khansa Maharani: Universitas Indonesia, Faculty of Economics and Business
Rofikoh Rokhim: Universitas Indonesia, Faculty of Economics and Business

A chapter in Proceedings of the International Conference on Business, Economics, Social Sciences, and Humanities - Economics, Business and Management Track (ICOBEST-EBM 2024), 2024, pp 78-91 from Springer

Abstract: Abstract We examine the effectivenes of Loan-to-Value (LTV) ratio policy in shifting the mortgage market in Indonesia through the supply-demand framework. The observation falls in the periode of 2012-2022 and analysed using two-stage least square (2SLS) methods. The results indicate that the demand side is indicated to be more responsive towards the LTV policy and the biggest difference happened when the market were in bust. by the LTV than the supply side. Furthermore, it is found the indication the most effective LTV happened when supply and demand moved in parrallel. However, it is indicated that the LTV will only be effective when there is surplus in mortgage market, not in equilibrium. This finding is different from prevailing studies about LTV policy and demand for mortgage.

Keywords: Mortgage; LTV; Supply; Demand (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:spr:advbcp:978-94-6463-465-5_7

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DOI: 10.2991/978-94-6463-465-5_7

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