The government has finalized 14 key measures to enhance access to finance for housing projects, including the establishment of an Apex Housing Finance Institution. This decision was reached during the latest meeting of the Working Group on “Access to Finance” under the leadership of Hafiz Mian M. Nauman (Ex-MPA Punjab), Convener at the Naya Pakistan Housing Development Authority (NAPHDA
).
Key Recommendations by the Working Group on “Access to Finance”
- Reduction of the policy rate (to single digits) and lowering the operating costs of banks.
- Fixed-term loans for periods of 5, 10, and 20 years.
- Reintroduction of markup subsidies for low-cost and affordable housing.
- Launch of mortgage bonds for easier access to finance.
- Establishment of an Apex Housing Finance Institution.
- Expanded role of Micro Finance Institutions (MFIs).
- Strengthening of foreclosure laws with efficient enforcement mechanisms like eviction in case of default.
- Development of an end-user financing model for apartment projects.
- Requirement for banks to allocate 10% of their private sector credit to the housing and construction industry.
- Development of a risk management framework to mitigate mortgage financing risks, including insurance.
- Strengthening of the Pakistan Mortgage Refinance Company (PMRC) with budgetary support and collaborations for subsidized credit facilities.
- Launch of an awareness campaign and financial literacy program for consumers.
- Development of innovative mortgage financing products such as:
- Incremental housing microfinance
- Community-based housing projects
- Subsidized rental housing
- Takaful-based housing insurance products
- Help-to-buy equity loans for first-time homebuyers
- Fixed-rate mortgages
- Green mortgages
- Buy-to-let mortgages for rental income
- Offset mortgages linked to savings accounts
- Digital mortgage platforms using blockchain for transparency
- Collaboration with real estate developers for consumer mortgage options
- Fintech-driven solutions for innovative financing
- Strengthening the HR capacity of financial institutions in mortgage financing.
Regulatory Insights from the State Bank of Pakistan (SBP)
Dr. Faisal Shafaat, representing the State Bank of Pakistan (SBP), provided a comprehensive briefing on the regulatory framework for prudential regulations. He noted that the capital adequacy ratio has been raised to 35%, enabling the banking sector to disburse Rs. 233 billion in mortgage financing. He also discussed SBP’s microfinance policy, which facilitated the disbursement of Rs. 93 billion under the Mera Pakistan Mera Ghar (MPMG) Scheme for low-income groups.
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Dr. Faisal also highlighted challenges in execution and subsidies, particularly under IMF policies, and emphasized the need for relaxing policy rates (KIBOR) to ensure faster and more accessible financing for the housing sector.
