The federal government has launched a new subsidized housing finance scheme, “Mera Ghar – Mera Ashiana,” targeting Pakistan’s middle and lower-income groups in a bid to make homeownership more accessible amid soaring property prices.
Outlined in a circular issued by the State Bank of Pakistan to commercial banks, the Housing Building Finance Corporation, and microfinance banks, the scheme is designed to address the country’s deepening housing affordability crisis.
Over the past five years, property prices have surged to unprecedented levels, with even modest homes in Karachi now costing at least Rs. 10 million. This sharp rise, fueled by unchecked speculative investment and the influx of black money, has pushed homeownership out of reach for most Pakistanis, especially those in the middle and lower-middle classes.
Despite the growing crisis, successive governments have largely refrained from intervening to control property prices, allowing the market to spiral. The new initiative aims to reverse this trend by offering subsidised loans of up to Rs. 3.5 million for the purchase or construction of affordable homes.
Under the “Mera Ghar – Mera Ashiana” scheme, eligible applicants can secure financing for buying a house, constructing a home on an existing plot, or purchasing a plot followed by construction. The scheme is limited to homes of up to five marlas or flats and apartments measuring up to 1,360 square feet (about 120 square yards).
Financing is divided into two tiers: Tier-1 covers loans up to Rs. 2 million, while Tier-2 supports loans between Rs. 2 million and Rs. 3.5 million. Borrowers can opt for repayment terms of up to 20 years, with the government subsidising the markup for the first decade.
Interest rates will be pegged to the one-year Karachi Interbank Offered Rate (KIBOR) plus a 3 percent margin, but participating banks are barred from charging processing fees or prepayment penalties.
To qualify, applicants must be first-time homebuyers, Pakistani citizens, and must not own any property in their name. The loan-to-value ratio is set at 90:10, with the government assuming 10 percent of the portfolio risk on a first-loss basis. Fixed pricing is set at 5 percent for Tier-1 and 8 percent for Tier-2, easing the financial burden on low-income buyers.
The State Bank has instructed all participating financial institutions to ensure clear communication of the scheme’s details and to implement robust systems to prevent misuse. A mechanism for the payment of markup and credit loss subsidies will be announced in due course.
