SBP reduces subsidised markup on Tier-1 housing loan

Karachi: The State Bank of Pakistan (SBP) has decided to revise the markup rates and subsidy payment terms downwards for the Tier-1 housing finance scheme that’s commonly known as Mera Pakistan, Mera Ghar – news sources reported on February 14. The government announced that the decision was taken in consultation with the stakeholders to boost the share of the sector in Gross Domestic Product (GDP).

Read: SBP asks banks to increase housing loan share by 7%

As per the notification released on February 12, the following changes in tier-1 housing finance lending have been made:

• Markup financing for 1-5 year duration will now be charged 2% as compared to prior 3%
• Markup rate for the period 6-10 years will be 4% as compared to previous 5%
• In comparison to KIBOR plus 250 basis points announced earlier, the same finance for 11 to 15 years will be paid at a 5% interest rate

Read: SBP launches incentive scheme to boost remittances

Other details shared in the report released by SBP revealed:

• Lending for housing and development has expanded by 85% in 2021
• Credit for the Prime Minister’s Home Scheme received PKR 38 billion in finance
• Credit for house building climbed by PKR 163 billion to PKR 355 billion in 2021
• Financing under the Mera Pakistan Mera Ghar (MPMG) increased from near zero to PKR 117 billion in 2021

It is important to remember that the SBP has issued an advisory to banks to increase lending for the housing sector to 5% of their total commercial lending by the end of December 2022.