SBP shares good news over low cost house financing loans
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KARACHI – The State Bank of Pakistan has allowed banks to accept personal guarantee of third party for low-cost house financing to cover mortgage risks.
In a statement on Monday, the central bank said applicants currently face difficulties to obtain housing finance, especially for low-cost housing as banks are reluctant to take the risk of the house left incomplete or documentation completion.
With an aim to facilitate banks in extending low-cost housing finance to applicants, SBP has allowed them to accept personal guarantee of third party until the housing unit is completed and the mortgage is finalized. The guarantee remains valid for a maximum period of one year.
“This step will help promote homeownership of potential borrowers wishing to avail housing finance under government markup subsidy scheme issued by State Bank of Pakistan on October 12, 2020,” said the central bank.
The State Bank of Pakistan has issued five regulatory relaxations to incentivise banks to promote low-cost housing finance in the country.
Banking industry can enjoy markup subsidy facility by the government and regulatory incentives under low-cost housing finance.
The value of housing unit has been increased from Rs3 million to Rs3.5 million and maximum loan size from Rs2.7 million to Rs3.15 million.
The third-party guarantee will cover the period from the disbursement of loan to the time when construction is completed and risk coverage becomes available by Pakistan Mortgage Refinance Company (PMRC).
