Home loan financing in Pakistan [2022]

Home loan in Pakistan has been rapidly increased in this year. Due to covid-19 whole Pakistan was shut down, the economy was decreasing and people were getting unemployed. The government had to open back offices. Real estate business started running and within few months the loan from the bank for construction and housing has grown by Rs 54bn to Rs 202bn. This was the highest amount of loan in construction sector ever recorded. Data discrepancies apart, there is little doubt that mortgage finance is slow to grow despite tax and interest rate incentives and housing subsidies announced a year back for developers, builders and potential homeowners.

PTI government has been promoting housing sector, they first introduced amnesty scheme and now they are also taking measures to make finance a little easier for the citizens. Financing scheme at lower market rate is also revealed by SBP. State Bank of Pakistan has pushed banks to boost their housing and construction finance portfolios by 5%. If the banks didn’t meet the mandatory target then they have to pay the penalty. This scheme is seen to be working. The government has recently increased the interest rate subsidy to provide more affordable housing without increasing the cost limits for homeowners.