Indonesian Mortgage NPL Rate Increases to 3.31% in September 2025

Economic Challenges Drive Rise in Non-Performing Loans

The quality of housing loans in Indonesia has deteriorated as reflected in the rising non-performing loan (NPL) rate, which reached 3.31% in September 2025. This represents an increase from 2.64% in September 2024. According to data from Bank Indonesia's Financial System Statistics (SSKI), the slight decrease from the August 2025 rate of 3.35% offers little comfort as the overall trend remains concerning.

Factors Contributing to Increased NPL

Economic analyst Yanuar Rizky attributes the rise in NPL to decreased purchasing power resulting from reduced employment and business slowdowns. Specifically, layoffs in the formal sector and the deceleration of Micro, Small, and Medium Enterprises (MSMEs) have left many mortgage holders vulnerable to default as their incomes dwindle or disappear. Rizky emphasizes that a recovery in NPL rates is contingent upon broader economic improvement and increased employment opportunities, particularly among vulnerable groups.

Potential Solutions to Mitigate NPL

To address the rising NPL, Rizky suggests that credit restructuring and relaxation could be viable strategies, provided that banks have sufficient liquidity. This approach, coupled with economic recovery measures, could help stabilize the mortgage loan sector. The current situation underscores the need for comprehensive measures to support both the banking sector and the broader economy.