Pakistan Expands Affordable Housing Finance Scheme

Pakistan

Pakistan: The Government of Pakistan has expanded the Markup Subsidy and Risk Sharing Scheme for Affordable Housing Finance by increasing the maximum loan limit from Rs 3.5 million (US$37,900) to Rs 10 million (US$108,290). The customer markup rate has been standardised at 5% for all tiers, replacing the earlier structure where Tier 2 loans carried an 8% rate. The revised policy also increases eligibility criteria for property size, allowing houses of up to 10 marlas, or 2720 square feet, and flats up to 1500 square feet. Loans will continue to follow a 90:10 loan-to-value ratio, where banks finance 90% of the property cost and buyers contribute 10%.

The programme aims to support the construction and purchase of 500000 housing units over the next four years. The government has allocated Rs321.96 billion (US$3.486 billion) in subsidies to support the first 50000 units through markup subsidies and risk-sharing costs. Loans already issued at 8% interest will be adjusted to the revised 5% rate. The scheme is expected to increase activity in housing construction and related industries, including cement, steel and banking.

Source: Link News