The Economy Improves, Household Credit Gradually Increases

The Economy Improves, Household Credit Gradually Increases

Indonesia’s economy is showing a good recovery like before the Covid-19 pandemic. The improving economy has also boosted the credit financing sector. The Banking Financing Survey Report from Bank Indonesia for January 2023 shows that credit demand from the household sector has gradually increased.

The share of household respondents who financed through credit debt grew by 10.6% in January, up from 9.5% in the previous month.

“The main source of household fulfillment in January 2023 came from commercial banks with a share of 38.9%, slightly down from 40.1% in the previous month,” wrote the BI Survey.

Other alternative sources of financing from this sector are cooperatives, leasing, and friends which have respective shares of 20%, 18%, and 7.5%.

Based on the type of use, the household sector attracted the most multi-purpose loans (KMG), namely 44.5% of total new financing in January 2023.

Then, this position was followed by motor vehicle loans (KKB) at 22.9% and home ownership loans (KPR) at 11.6%, as well as household equipment loans at 10.1% and credit cards at 3.9%.

Furthermore, throughout January 2023, KMG and KKB were observed to increase. Meanwhile, mortgages experienced a decline, and credit cards remained stable.

As for spending, household respondents spend Rp. 1-3 million per month dominated credit withdrawals, but the amount decreased from the previous month.

BI noted that household financing plans will increase in the future. The majority of respondents estimate that they will withdraw loans or credit in the next 6 months, namely 2.2%. Meanwhile, the types of credit that will increase in the future are KMG and KPR.