Karachi: The State Bank of Pakistan (SBP) on Thursday announced major changes in the government’s low-cost housing finance scheme; stating that it was lowering the interest rate in addition to increasing the loan amount for borrowers, according to news sources.
The SBP statement read the markup subsidy scheme of housing finance has been reduced by a significant margin to align it with the ‘prevailing housing market dynamics’. As per this revision, the potential borrowers have been categorized into three tiers – with the addition of tier-0 to facilitate the participation of microfinance banks under the disbursement of financing of up to PKR 2 million per housing unit.
Under tier-0, microfinance banks will either use their funds or banks will lend them for onward lending to low-income mortgagors of housing finance initiative. The said facility is being provided with the administrative support of the Naya Pakistan Housing and Development Authority (NAPHDA) and implemented by SBP through designated banks.
Furthermore, the tier-1 end-user subsidized markup rate (for people buying or constructing housing units up to 5 marlas and 850 square feet area under NAPHDA projects) has been lowered to 3% for the first five years and 5% for the next five years – instead of 5% and 7% respectively. The central bank said that this will help reduce the instalment burden on low-income applicants.
As for applicants falling under tier-2 (5-marla houses/apartments in non-NAPHDA projects) and tier-3 (10-marla houses/apartments in non-NAPHDA projects) of the schemes, the requirement of a maximum one-year-old housing unit has been waived till March 31, 2023. The restriction on the first transfer of housing units and the maximum value of housing units have also been removed.
Additionally, the maximum covered area for flats and apartments has been increased and for land-based houses, the covered area restriction has been eased. For tier-2, the maximum allowed financing has been doubled from PKR 3 million to PKR 6 million and for tier-3, the financing limit has been extended to PKR 10 million from the previous PKR 5 million. The minimum eligible tenor for this scheme has also been lowered to 5 years from 10 years in order to facilitate individuals preferring shorter-term financing.
