The government has finalized 14 major initiatives to improve access to finance for housing projects, including the establishment of an Apex Housing Finance Institution. These measures were agreed upon during the latest meeting of the Working Group on “Access to Finance,” chaired by Hafiz Mian M. Nauman, former MPA Punjab and Convener at the Naya Pakistan Housing Development Authority (NAPHDA).
The Working Group presented a comprehensive set of recommendations aimed at addressing financing challenges in the housing sector. Key proposals include:
- Reduction of the policy rate to single digits and lowering banks’ operating costs.
- Introduction of fixed-term loans for 5, 10, and 20 years.
- Reintroduction of markup subsidies for low-cost and affordable housing.
- Launch of Mortgage Bonds to facilitate easier access to finance.
- Establishment of an Apex Housing Finance Institution.
- Expansion of the role of Microfinance Institutions (MFIs).
- Strengthening foreclosure laws to improve enforcement mechanisms, such as eviction on default.
- Implementation of an End User Financing Model for apartment projects.
- Mandating banks to allocate 10% of their private sector credit for the housing and construction industry.
- Development of a risk management framework, including insurance, to mitigate risks in mortgage financing.
- Strengthening the Pakistan Mortgage Refinance Company (PMRC) through budgetary support and collaboration with financial institutions for subsidized credit.
- Launch of awareness campaigns and financial literacy programs to educate consumers.
- Development of innovative mortgage financing products, such as incremental housing microfinance, subsidized rental housing, Takaful-based housing insurance, and fixed-rate mortgages.
- Encouraging fintech companies to create digital mortgage platforms using blockchain for secure and transparent financing.
Dr. Faisal Shafaat, a representative of the State Bank of Pakistan (SBP), provided a detailed briefing on the regulatory framework, including prudential regulations. He highlighted that the banking sector had disbursed Rs. 233 billion in mortgage financing, with Rs. 93 billion allocated under the “Mera Pakistan Mera Ghar” (MPMG) scheme for low-income groups. He also discussed the SBP’s microfinance policy and its role in improving access to finance for underserved communities.
However, Dr. Shafaat pointed out several challenges, including execution and subsidy issues linked to IMF policies. The Chair of the meeting emphasized the need for relaxing policy rates, such as KIBOR, to facilitate faster and easier access to financing for housing development.
The recommendations aim to address financing gaps, promote affordable housing, and encourage innovation in mortgage financing to cater to all income groups. These measures are expected to play a critical role in advancing the government’s housing agenda and improving access to affordable housing for citizens.
