In light of the previous elections, elected govt intention was clear on that they have to come up with an all new policy of easy home financing so that the national need of housing can be met. After which a massive govt funded Naya Pakistan Housing scheme was launched along with real estate & constructional industry relief to ensure a unanimous growth for overall real estate & housing.

As per the new policies introduced & allocated by State Bank of Pakistan. Currently these banks are providing mortgage (home financing). After mortgage approval a monthly fixed installment must be given to the respective bank.

Enlisted Banks providing home finance:
• Bank Alfalah.
• HBL.
• MCB.
• Askari Bank.
• UBL.
• Bank Al Habib.
• JS Bank.
• Meezan Bank.
• National Bank of Pakistan has the most flexible criteria for the home financing along with HBFC house Building finance corporation has also designed a new & feasible model the progressive housing facilitation.

Although every Bank has indulged into there own criteria for the applicants but below mentioned points are Basic for all citizens of Pakistan.

Criteria
1. Applicant must be a Pakistani or Overseas Pakistani*
2. Applicant must be minimum of 25 years at the time of applying & maximum of 60 years or less at the time of loan maturity.
3. All existing customers of the respective banks, minimum salary eligibility for the mortgage must be PKR 60000 to 100,000 per month.
4. For new to bank customers, minimum monthly income to be PKR 150,000.

A plan of subsidizing Rs 2 million to Builders & individuals as per SPB has certainly devised a policy that will oovercome the shortfall of growing in housing.this all is done under State Bank of Pakistan provision by introducing <Promotion of Low-Cost Housing Finance’

“By definition low-cost housing financing means to adopt an loan amount of up to Rs2 million with the property valuing up to Rs2.5 million.

An subsidised mark-up rate of 5%, while remaining half would be provided by banks and development financial institutions (DFIs) at a fixed rate of 12% or variable rate of 1-year KIBOR plus risk premium up to 4%.

“The SBP will refinance up to Rs1 million or 50% of loan amount at a rate of 1% to banks/DFIs and the end borrower rate will be 5%. 50% loan/financing amount the banks/DFIs

Estimated that annual demand for new homes is 700,000, currently only half of this is met. SPB instructed banks to targets & DFIs for house financing. Banks & DFI will definitely benefit from this in meeting their overall revenue.

World bank also approved $ 145 million for this expansion.

“Microfinance institutes are also looking to increase housing finance amount up to Rs1 million from Rs 0.5 million,

“The biggest reasons behind a low dip trend in housing finance in 2008-13, was inclination of banks towards risk-free financing. & then interest rates were also very high, it was easy for banks to make money while investing in govt papers. Due to this housing finance was not focused.

Mortgage in Pakistan involves induction of huge sum of lendings to its residents for housing loans for at least 5 to 10 years. A maturity mismatch is faced by Banks as long-term housing loans are currently short-term funding against the deposits are not at a sustainable situation as the mortgage market is growing to its potential.