Property Loans Research Articles

Implementation of Loan to Value Easing Policy and Efforts to Overcome Problem Property Credit

The function of national banking is not only as a forum for collecting and distributing public funds or as an intermediary for savers and borrowers (investors) but also to improve people's living standards; one of these efforts is to provide various types of Credit, one of which is property credit. One of Bank Indonesia's efforts is to provide relief by increasing the loan to value (LTV) ratio for the lower middle class. Based on this background, this article examines and analyzes the considerations for issuing macroprudential policies regarding loan to value relaxation on property loans and the efforts banks should make to handle problem loans. This type of research is empirical legal research because it examines the considerations for issuing macroprudential policies regarding loan to value relaxation on property loans and the efforts banks should make to handle problem loans. PT. State Savings Bank (Persero) Tbk. Applying a maximum limit differs from Bank Indonesia Regulations because banking upholds the principle of prudence.

Loan to Value Ratio, KPR and KPA in Indonesia

The COVID-19 pandemic that occurred at the beginning of 2020 has caused economic growth to decline in many countries, including Indonesia. One of the steps taken with the aim of economic recovery is by increasing the consumption in credit channels or non-credit channels, such as social aid. This thesis discusses loan-to-value ratio effects on property loans, KPR, and KPA in Indonesia. Property loans, KPR and KPA, are included in consumer credits, and loan-to-value ratio is one of the macroprudential policy instruments. The method used in this thesis is Autoregressive Distributed Lag linear regression (ARDL) with property credit, KPR, and KPA as the dependent variable, the dummy variable of the loan-to-value ratio as the independent variables, and consumer credit interest rates, gross domestic product and inflation as the control variables. In addition, the interaction variable between the dummy variable of loan-to-value ratio and consumer credit interest rate is also used. The results showed that the interaction variable between the dummy variable of tightening in loan-to-value ratio and consumer credit interest rate is significant to property loans, KPR, and KPA in the long run. Furthermore, GDP and consumer credit interest rates, which are control variables, are also significant to property loans, KPR, and KPA in the long run

Securitization of assets with payment delay risk: A financial innovation in the real estate market

AbstractWe study a new type of securitization that deals with banks' processing time, mortgage‐receivable‐backed securities (MRBSs) issued by real estate developers. Unlike traditional mortgage‐backed securities (MBSs), the major risk of underlying assets of MRBSs is payment delay instead of default and prepayment. Using unique loan‐level data, we estimate proportional hazard models and detect factors that affect the risk of underlying assets of MRBSs, including bank characteristics, property–loan–household characteristics, local market conditions, and macroeconomic conditions. Especially, we find that the effects of house prices and loan‐to‐value ratios on MRBS risk are the opposite of those on traditional MBS risk. Based on the estimates, we simulate cash flows of an underlying‐asset pool and analyze the shortfall risk of the corresponding security tranches. We find that the securitization process imposes a natural adverse selection on the underlying assets.

Access to Decent Housing in Congolese Urban Areas: Evolution of Associated Factors between 2005 and 2016

The proportion of decent housing found from the data of the 1-2-3/2012 DR Congo survey in urban areas is 7.8%. This situation prompted us to conduct a study on the evolution of factors associated with access to decent housing in urban areas of the DR Congo, based on data from the 1-2-3/2005, 1-2-3/2012 and E-QUIBB/2016 surveys, in order to identify the factors that are determining over time over these three periods. Our specific objectives are to indicate the proportion of decent housing in urban areas of the DR Congo from 2005 to 2016, to find the factors associated with access to decent housing in urban areas of the DR Congo over the three periods, and to study the evolution of these associated factors. In 2005, 2012 and 2016, the proportions of decent housing in urban areas of the country were respectively 4.1%, 9% and 12.3% respectively. The associated factors (in relation to the head of the household) acting over the three periods are: province of residence, socio-professional category, age, housing occupation status, education and gender. These six determinants all evolved over time, resulting in an overall increase in decent housing of about 8%. These results showed that in DR Congo there is not enough investment in housing. Thus, investment by the State and other partners in the construction of low-cost housing, and the facilitation of land and property loans and investment loans, will enable vulnerable social groups, such as young people of both sexes throughout the country, to have easier access to decent housing.

Analisis Keterjangkauan Properti Residensial Pada Wilayah Jawa-Bali

In addition to the problem of the availability of residential stock from the supply side, there are problems from the demand side regarding people's purchasing power in reaching housing prices, or often referred to as afordability problems. This study investigates the affordability of the median income group and the lowest 40% income group from the expenditure approach of the national economic survey (susenas, 2020). The calculation of affordability using the installment affordability index approach, with the object of research in the Java-Bali region consisting of DKI Jakarta, West Java, Central Java, East Java, DI Yogyakarta, Banten and Bali. The results showed that the installment affordability index (IKC) in the DKI Jakarta and Banten areas showed a value above 1, this means that the community is still able to reach small-type residential property loan installments according to the price limit for treaded welfare homes set by the Ministry of Public Works and Public Housing. (PUPR). However, for people in West Java, Central Java, East Java, Yogyakarta and Bali, the IKC value is below 1, meaning that with a median income and an upper limit of 40% of the lowest income in these areas cannot reach small-type housing installments. The problem of affordability will become a development problem, especially in achieving the SDG's goals which have a target in 2030, the community has access to adequate, safe, and affordable housing.

COMPARATIVE STUDY OF DETERMINANTS OF THE MALAYSIAN HOUSEHOLD NONPERFORMING LOANS: EVIDENCE FROM NARDL

This study compares the sensitivity of each household nonperforming loans (NPLs) category in Malaysia, allowing asymmetry across different household credit types, credit cards, personal uses, purchase of residential properties and purchase of transport vehicles. Differences in the impact of household debt on the Malaysian household NPLs are found evident. In the sample period from 2006 to 2018, the findings suggest an asymmetric impact of credit card debts on the household NPLs. This linkage is explained by only short-run negative changes in credit card outstanding loans. Besides that, the residential property loans behave asymmetrically in the long and short run, with higher impact sources from the negative changes. In a disaggregated NPL analysis focusing on a different type of loan portfolio, the asymmetry further enhances policy and regulation-making in managing household credit risk.

Foreclosure Sales Under the UCC During the Covid-19 Pandemic

Under the Uniform Commercial Code (UCC), “every aspect” of a foreclosure sale must be commercially reasonable. The traditional commercial reasonableness standard was tested during the first year of the COVID-19 pandemic, as the unprecedented circumstances imposed by state restrictions prompted increased judicial scrutiny of UCC foreclosure sales. This occurred most prominently in the context of commercial property mezzanine loan foreclosures. A mezzanine loan is a property loan secured by a pledge of equity interests in the property-owning entity rather than a security interest in the property itself. As state mortgage foreclosure moratoriums restricted lenders’ abilities to foreclose on commercial property, mezzanine lenders initiated UCC foreclosures to circumvent this barrier and take control of their collateral. 
 This Note argues that courts adopted a more probing and holistic analytical approach to commercial reasonableness analyses during the first year of the pandemic. This approach more closely analyzed the procedures employed by foreclosing lenders and contextualized fair price considerations within wider market and societal concerns. This Note then proposes ways for secured creditors to protect their foreclosure sales during future periods of market uncertainty. Although secured creditors cannot fully insulate their foreclosure sales from fair price challenges in a market downturn, they should employ additional procedural safeguards to deflect commercial reasonableness challenges aimed at the alleged procedural irregularities of such sales.

A Guard-Driven Analysis Approach of Workflow Net with Data

The correctness of workflow systems is dependent on not only their control-flows but also their data-flows. <italic xmlns:mml="http://www.w3.org/1998/Math/MathML" xmlns:xlink="http://www.w3.org/1999/xlink">WFD-nets</i> (Workflow net with data) can model both control-flow and data-flow of workflow systems, and are used to analyze/verify their correctness. The existing methods of analyzing/verifying WFD-nets are based on their reachability graphs. However, the reachability-graph-based methods have two flaws: state space explosion and pseudo states, since the guard functions are not handled perfectly. Note that every transition of a WFD-net is labeled by a guard function, which is a Boolean expression <italic xmlns:mml="http://www.w3.org/1998/Math/MathML" xmlns:xlink="http://www.w3.org/1999/xlink">w.r.t.</i> data and can determine the progress of control-flow. In order to solve these problems, we propose a <italic xmlns:mml="http://www.w3.org/1998/Math/MathML" xmlns:xlink="http://www.w3.org/1999/xlink">guard-driven reachability graph</i> that can both alleviate the state space explosion problem and avoid pseudo states. We describe the related algorithms and develop a tool. A group of experiments illustrate the advantage and effectiveness of our approach, and an example of property loan shows its usefulness.

Dynamic implications of GDP, interest rates, taxes, income, foreign direct investments, housing prices on property NPLs

PurposeThe study on how macroeconomic factors affect non-performing loans (NPLs) have not been focussed on property loans, which had been amongst the largest contributor of NPLs in many countries. At the same time, whilst there are many studies that focusses on NPLs during the recession and financial crises, not many studies focus on how macroeconomic factors affect property NPLs in a recovering economic environment. The purpose of this study seeks to fill the gap by analysing the relationships between gross domestic product (GDP), interest rates, income, foreign direct investments (FDI), housing prices and taxes on property NPLs with Malaysia as a case study in which NPLs rose for the first time after declining for almost a decade since the 2008–2009 global financial crisis. This study aims to understand the dynamics and direction of causation in relationships.Design/methodology/approachThe author uses the auto regressive distribution lag analysis between the independent variables of GDP, interest rates, housing prices, service taxes, percapita income and FDI affecting the dependent variable of property NPLs from 2009 to 2017, during a unique period of recovering economic environment where NPLs rose for the first time in almost a decade of decline.FindingsThis study found that interest rates, housing prices, income, GDP and service taxes were found to possess long cause effects and long run elasticity with NPLs. At the same time, interest rates were found to implicate property NPLs significantly in longer periods, followed by GDP, housing prices, service taxes and income. FDIs were found to be insignificantly negative in implicating property NPLs in the long run.Research limitations/implicationsThis paper allows policymakers to understand the dynamic implications of crucial macroeconomic factors in affecting NPLs so that appropriate strategic monetary policies could be formulated towards addressing them. More focus shall be given to addressing the long term implications of these factors on NPLs.Practical implicationsAppropriate strategic monetary policy making can be channelled towards addressing these factors via understanding the short and long term implications of macroeconomic variables on property NPLs. Policymakers can take note of the long cause effects and long run elasticity of average interest rates, housing prices, income levels, GDP and service taxes with property NPLs so that appropriate long term policies can be addressed to control the rise of property NPLs in the country. At the same time, priority should be given towards strengthening of the GDP of the country due to its strongest impact in long term effects with reduction of NPLs in the country.Social implicationsThe insights from the present study suggest policymakers interested in bringing stability in the real estate finance system need to account for the various macroeconomic variables found in this study.Originality/valueThe paper is novel on at least two dimensions. First, this study involves focussing on a unique period of recovering economic environment where NPLs rose for the first time after a decade of decline since recovering from the 2008–2009 global financial crisis. At the same time, this study focusses on property NPLs, which is unique in nature compared to general NPLs. This study had enabled policymakers to better understand the dynamic implications of several macroeconomic variables affecting property NPLs and assist them in strategic monetary policy making.

NON-PERFORMING PROPERTY LOANS AND ITS ORIGINATION IN THE REAL ESTATE FINANCE SYSTEM: CASE STUDY OF MALAYSIA

A healthy real estate finance system is crucial for any economy to grow and thrive. However, in recent years, the sustainability and soundness of the Malaysian Real Estate Finance System had been in question as the number of non-performing property loans had been on the rise. This paper looks into how property NPLs originate within the real estate finance system in Malaysia and its current performance in Malaysia. A descriptive research design was conducted utilizing in-depth case studies of Malaysia to examine Malaysia’s real estate finance system consisting of loan originators in the primary market and the special purpose vehicle involved at the secondary mortgage market where it was found that the Malaysian Real Estate Finance System is efficiently developed and on par with other developed countries with a robust primary mortgage market, effective secondary mortgage market and a vibrant capital market. Further analysis found that there are a total of 57 financial institutions that are property loan originators in Malaysia that consists of 26 Commercial Banks, 16 Islamic Banks, 2 International Islamic Banks, 11 Investment Banks, and 2 Special Financial Institutions. In terms of NPLs in Malaysia, property loans are the largest component of total NPLs in the country, and subsequent analysis found that the number of property NPLs in the country had been rising since 2015, after a long decade decline. This study warrants further research into the causes of property NPLs in the country so that the causes of property NPLs can be monitored as part of the country's strategic monetary policy to control and reduce the number of property NPLs in the country. Ultimately, this also helps to contribute towards a sound and robust real estate finance system in Malaysia.

THE DYNAMIC RELATIONSHIP BETWEEN INFLATION AND NON-PERFORMING PROPERTY LOANS IN MALAYSIA

As costs of services and goods rise in Malaysia while income levels remain low and unemployment rises, there is significant concerns on the rising amount of non-performing property loans that seems to have a close relationship with inflation. Hence, it had been assumed by many where inflation leads to higher non-performing property loans, as a result of rising living costs that cause repayment defaults. In fact, recent findings from various countries across Asia had shown that higher levels of inflation tend to contribute positively to the increase of non-performing property loans. This study is to determine the effects of inflation on non-performing property loans in Malaysia during a unique economic period from 2010 to 2015, where NPLs, which had been declining since 2010 observed its first increase in 2015 after a consistent 5 year decline. This economic occurrence hence, offers a great opportunity of research into the economic observation of 2015 respectively. While there had been studies conducted on non-performing loans, there had been little light shed on the effects of inflation upon non-performing property loans specifically. The method adopted is applying Cointegration test and the Vector Error Correction Model (VECM), as well as Heteroskedasticity Tests, to validate the results in VECM. The results showed that there is a significant co-integration and relationship between non-performing property loans and inflation, lauding long run afflictions upon the real estate market which if not carefully monitored, may result in more property NPL delinquencies in Malaysia.

The Analysis of Property Loans Development in Indonesia

The property sector in Indonesia has an essential role in driving the national economy. The bank lending development to the property sector in April 2019 did not show significant growth and stagnant. This study analyzes the growth trend of property loans in Indonesia and estimates the factors that affect the number of housing loans (KPR) and apartment ownership loans (KPA) in Indonesia. The data used in this study are secondary data and time series. The analytical tools used in this research are trend and regression. The results showed that from 2020 to 2025, the property loan growth in Indonesia will still be sluggish. The condition is identified by construction loan which is expected to grow even though the increase is not too significant, real estate loan is still fluctuating, this is because in 2019 there was a decline in real estate loan growth of almost 50 percent from the previous year, and KPA and KPR are estimated to decline even though in nominal terms the number of KPR and KPA increases. The population number variable has a positive and significant effect on the number of KPR and KPA in Indonesia. The more the population, the more the number of KPR and KPA will increase. Meanwhile, the variables of economic growth and inflation in this study did not significantly affect the number of KPR and KPA.

Interruptive Time Series Analysis of GST Upon Non-Performing Non-Housing Property Loans: Case Study from Malaysia

Value Added Taxes increases the cost of living and affect the ability of loan repayments indirectly. The introduction of the Goods and Services Tax (GST) in Malaysia in 2014 had garnered significant attention on its potential negative effects on the property industry. Coincidentally, there is a rise of non-performing non-housing property loans (NPNHLs) consisting of industrial and commercial property loans as GST was introduced and was in effect. The NPNHLs which consists of mainly industrial and commercial property loans faced a steep increase for the first time in 2014, after a long and consistent decline since 2007. From the inception stage of the GST to its effective implementation date, the Malaysian NPNHLs responded with a unique pattern that offers an opportunity for research. Hence, this study aimed to investigate and measure the intervention spill-over effects of GST upon the Malaysian NPNHLs. Utilizing a quasi-experimental design of interruptive time series regression analysis, it was found that there is a close and significant relationship between the implementation of GST and the rise of NPNHLs in Malaysia. The pre and post intervention of the GST regime was found to be in sync with the rise of non-performing non-housing property loans in Malaysia. Keywords: value added tax, goods and services tax, interruptive time series regression, Malaysia

Još jednom o kreditima indeksiranim u švajcarskim francima

The problem of loans indexed in Swiss francs has stimulated the debate regarding the legality of these loans and the legality of state intervention to protect debtors during the last decade. The problem is not new since the issue of changes in the value of monetary obligations has occupied a legal mind for many centuries. Th e theory of monetary nominalism has been generally used in comparative law to regulate monetary obligations, while the valorist theory has served as its corrective. It is necessary to answer under which conditions the nominalist theory should step back, and the valorist theory should be applied? In search for the answer, the author explains the development of the institute of changed circumstances (rebus sic stantibus), emphasizing the contemporary approach to allow for the accepting of the extraordinary changes of commercial factors and the subsequent frustration of the contract's commercial purpose as justifications for the breach of contract or its amendment by courts. Th e European countries have solved the problem of loans indexed in Swiss francs by adopting special laws on the conversion of the CHF debts and by annulling the CHF loans on the grounds of the failure of banks to inform their customers about risks related with the undertaking of debts indexed in foreign currency. Th e author analyses the Serbian Law on conversion of living property loans indexed in Swiss francs and the legal opinion of the Serbian Supreme Cassation Court on the nullity of the Swiss francs contract clause in the light of comparative law views on the issues of the changes in the value of monetary obligations and the duty to inform in pre-contractual stage.

Petri Net Based Data-Flow Error Detection and Correction Strategy for Business Processes

Conceptual modeling, which includes both control-flow and data-flow modeling, has posed great challenges for conventional business process management systems. To support systematic data-flow modeling and analysis, in this paper, we propose a novel and effective Petri net-based approach. We first introduce a new type of Petri net, called WFIO-net, the firing rule of which is formally defined by extending classical Petri net with read and write semantics, to model both the control-flow and data-flow information. Then, we discuss about three possible data-flow errors over a WFIO-net, i.e., the missing, redundant and conflicting data errors. To detect such data-flow errors, we develop a polynomial complexity algorithm based on the so-called Activity Data Incidence Matrix (ADIM) of a WFIO-net. Following by that, we propose three effective correction strategies to resolve the detected data-flow anomalies. Finally, we present a property loan approval business process case study for our approach, and the study results demonstrate that the proposed detection and correction approaches are indeed very effective and can be applied to real-life settings.

Loan-to-Value Policy and Property Loans Risk in Conventional Commercial Banks of Indonesia

This study aims to determine the effect of loan-to-value (LTV) policy on bank's property loan risk. This study utilizes a purposive sampling method and multiple linear regression analysis techniques. The number of samples in this study is 66 banks with 563 observations data. The results show that bank's property loan risk, which is proxied by the NPL ratio of property loans, is lower in the LTV tightening policy period than the easing period. We utilize some control variables in this study: inflation, gross domestic product growth, property loan growth, and bank size. Inflation, property loan growth, and bank size have a significant positive effect on non-performing loans, while gross domestic product growth has a significant negative effect. Keywords: Loan-to-value policy, bank risk, property loan risks, non-performing loans, Indonesia. * Faculty of Economics and Business, Universitas Airlangga, **PT Mandiri Sekuritas *** Faculty of Economics, Kartini University https://doi.org/10.21632/irjbs.12.3.267-276

Default Prediction of Commercial Real Estate Properties Using Machine Learning Techniques

Academics and analysts have mostly employed stochastic and statistical default models to project defaults for properties backing commercial mortgage-backed securities. Although over the last few years there has been increased interest in using machine learning models to predict defaults on consumer loans, there has not been a comprehensive study that uses machine learning techniques to predict commercial real estate loan defaults. In this article, the authors investigate the use of machine learning techniques to predict defaults for commercial real estate property loans. The authors assess the performance of classification techniques based on machine learning (support vector machine, random forest, boosting, and classification tree) compared to the performance of the typical statistical technique. The principal findings of this study are that the support vector machine technique for predicting defaults on commercial property loans significantly outperforms other methods, and it has stable performance in imbalanced datasets. Moreover, the boosting technique identified the ratio of the capitalization rate spread to the average capitalization rate spread of property type as the most important driver of defaults in commercial real estate loans. TOPICS:Real estate, big data/machine learning Key Findings • To predict defaults and future performance of commercial property loans, a model has to be developed that incorporates the property characteristics of the individual properties. • Support vector machine technique (a type of machine learning) for predicting defaults on commercial property loans significantly outperforms typical statistical default models. • The machine learning technique of boosting identified the ratio of the capitalization rate spread to the average capitalization rate spread of property type as the most important driver of defaults in commercial real estate loans.

Pengaruh Return On Equity (ROE), Debt To Equity Ratio (DER), Investment Opportunity Set (IOS), dan Inflasi terhadap Dividend Payout Ratio (DPR) (Studi : Pada Perusahaan Property and Real Estate yang Listed di BEI Tahun 2006-2009)

Industrial development real estate and properties in Indonesia drove the rapid post-financial crisis in 1998, indicated by increasing capacity of national property and reduced level of NPL property loans. On the other, the distribution of dividend to shareholders decreased, even many who do not share. The research was also supported by the existence of the research gap from previous studies. This study aims to examine the influence of Return On Equity (ROE), Debt to Equity Ratio (DER), Investment Opportunity Set (IOS), and Inflation toward Dividend Payout Ratio (DPR) on property and real estate companies which listed on Indonesian Stock Exchange 2006-2009. Data sample amount of 6 companies from 41 companies those listed on Indonesian Stock Exchange. The analysis indicates that ROE variable partially significant toward DPR in property and real estate company which is listed in BEI over period 2006- 2009. While the DER, IOS and Inflation variable partially not significant toward DPR

PENGARUH VARIABEL MAKROPRUDENSIAL DAN MONETER TERHADAP HARGA PROPERTI DI INDONESIA

The research aims to see the impact as simultaneous and partial of Loan To Value (LTV), interest rate, and inflation to property prices in Indonesia. The type of data in studies are time series in quarterly data from first quarterly of 2008 to second quarterly of 2016. By using ordinary least square , estimation results show that LTV and interest rate partially have positive and significant impact on property prices in Indonesia. Meanwhile, inflation has negative but not significant on property prices in Indonesia. The suggestion about the the next research is give additional variables or other indication that have impact to property prices in Indonesia. Furthermore, Banks with property loan should arrange new strategy like reduce down payment or provide installments without down payment to homeless society. So that, the mortage growth can be sustained and speculator financing that causes an increase in property prices can be avoided.

An investigation into the investment decision-making practices of South African institutional investors

PurposeThe South African listed property market has changed its legal basis from property loan stock companies and property unit trusts to adopt the more familiar international structure, real estate investment trusts. The main distinction is how shareholding is structured and investment returns are paid out to shareholders, which results in a different tax treatment. It is hoped that this change would attract more foreign investment, but it is questionable if this is sufficient to convince global investors who, amidst a seeming worsening of the stability in the political and economic environment, would probably need more insight into aspects such as investment decision making within these South African organisations. The paper aims to discuss these issues.Design/methodology/approachUsing a balanced scorecard (BSC) framework, this study investigates the relevance of investment decision-making frameworks in South Africa. A survey using a sample of institutional investors that are included in the South African Property Market Index was conducted.FindingsThe study found similarities in decision-making priorities of South African institutional investors to those of previous studies. With the focus on retail property, tenant mix and secondary to that, quality of the centre management team is found to be important for forecasting expected returns in a retail investment decision environment. Diversification strategies were found to have similar results to previous studies, leaning more towards geographic location than economic location. Further, the study suggested the use of a BSC framework, linking the financial information and different financial ratios to nonfinancial aspects that need specific consideration in a retail investment environment.Research limitations/implicationsRetail property is considered to be of particular concern due to the business enterprise value that could be created if superior management techniques are applied. The investment decision stage concerned with forecasting expected returns relies on financial and quantitative models such as those derived from Modern Portfolio Theory. In a shopping mall environment, however, future performance is driven by nonfinancial factors, for example, tenant mix and superior customer experience. Therefore, forecasting expected returns in a retail environment requires a nuanced approach relative to other commercial property sectors.Originality/valueThe paper is considered to be original in its analysis of the retail real estate market in South Africa. This offers new insight into retail properties specifically, but also how investors in South Africa react to decision-making practices. This adds value in the internationalisation of the property market and the consistency and transparent practices applied globally.