Banking - Bank mortgage rates have not eased despite BI Rate decreased

Banking - Bank mortgage rates have not eased despite BI Rate decreased The reduction of Bank Indonesia's (BI) benchmark interest rate to 5.75% has not yet translated into a commensurate decrease in Home Ownership Loan (KPR) interest rates offered by banks. This is despite the fact that the Financial Services Authority (OJK) data indicates that the average Basic Credit Rate (SBDK) for general banks in the KPR segment remains at 9.28%. Bank Negara Indonesia (BBNI), with an SBDK of 9.32% as of January 7, 2025, currently boasts the lowest SBDK in the KPR segment. However, Bank Central Asia (BBCA) maintains the highest profit margin at 4.65% with an SBDK of 9.51%. If Bank Rakyat Indonesia (BBRI) sets its SBDK for the KPR segment at 10% with a profit margin of 2.9% as of January 1, 2025, and Bank Mandiri maintains its mortgage interest rate at 12.5% with a profit margin of 2.8% (unchanged since October 2024), these figures illustrate the current market landscape. (Source : Kontan) Comment : The passage highlights the complex interplay of factors influencing mortgage interest rates in Indonesia. While the BI rate cut is expected to eventually lead to lower borrowing costs, the lag in transmission and the competitive dynamics within the banking sector will continue to shape the mortgage market in the coming months. We anticipate a lag of approximately one semester before the transmission of benchmark rates to yields becomes fully effective. Notwithstanding this, we maintain an overweight position in the banking sector, with BBCA and BMRI as our preferred picks. Within the Islamic banking segment, BRIS remains our top choice.