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

In: Proceedings of the International Conference on Business, Economics, Social Sciences, and Humanities - Economics, Business and Management Track (ICOBEST-EBM 2024)

Author

Listed:
  • Auryn Khansa Maharani

    (Universitas Indonesia, Faculty of Economics and Business)

  • Rofikoh Rokhim

    (Universitas Indonesia, Faculty of Economics and Business)

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.

Suggested Citation

  • Auryn Khansa Maharani & Rofikoh Rokhim, 2024. "Sustainability of Loan-To-Value Policy and Mortgage Market in Indonesia: Supply-Demand Analysis," Advances in Economics, Business and Management Research, in: Lia Warlina & Senny Luckyardi (ed.), Proceedings of the International Conference on Business, Economics, Social Sciences, and Humanities - Economics, Business and Management Track (ICOBES, pages 78-91, Springer.
    • Handle: RePEc:spr:advbcp:978-94-6463-465-5_7
    DOI: 10.2991/978-94-6463-465-5_7
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