Indonesia's FLPP Housing Subsidy Holds 5% Rate as BI Rate Rises, Extends Tenor to 40 Years

The Ministry of Housing and Settlements (PKP) confirmed that the interest rate on the Housing Liquidity Facility (FLPP) will remain fixed at 5 % for the entire loan term, despite Bank Indonesia raising its benchmark rate to 5.75 % in June 2026. The program, aimed at low‑income families, also provides a down‑payment subsidy of Rp4 million and guarantees affordable monthly installments.

In parallel, the government approved extending FLPP mortgage tenors to up to 40 years to broaden access for low‑income borrowers. Industry representatives, such as PT Alexandra Citra Pertiwi’s director Tuti Mugiastuti, warned that a 40‑year term may be too long but urged a price adjustment of subsidized homes by 5‑7 % to reflect rising construction costs. The ministry noted that FLPP disbursed financing for 81,268 units by 24 June 2026 and reached a record 278,000 units in 2025.